These cash back credit cards offer generous rewards, but they go about it in different ways. We’ll help you decide which card will leave you better off.
If you make a lot of regular purchases with a credit card for the sake of convenience, you may as well apply for a card that lets you earn cash back on your purchases. Both the Blue Cash Preferred® Card from American Express and the American Express Cash Magnet® Card make earning cash rewards easy, but one offers flat-rate rewards while the other offers lucrative bonus categories. Which card is best for you? That depends on your spending style and your goals.
We like the Blue Cash Preferred because you earn exceptional rewards at U.S. supermarkets and U.S. gas stations – and a bigger introductory bonus to boot. The problem? This card charges a $95 annual fee (waived for the first year), which is rare among cash back credit cards.
By contrast, the American Express Cash Magnet card doesn’t charge an annual fee, nor does it have any categories to keep track of. Once you’re approved, you’ll earn a flat 1.5 percent back for every dollar you spend with no limits on the amount you can earn.
If you’re unsure which card could help you earn more cash back, it helps to compare all their details side by side. The table and commentary below can help you decide which card to sign up for.
Blue Cash Preferred vs. Cash Magnet
Blue Cash Preferred
|Introductory bonus||$300 cash back if you spend $3,000 in first 6 months||$150 cash back if you spend $1,000 in first 3 months|
|Annual fee||$95 (waived for the first year)||$0|
|Estimated yearly rewards value ($15,900 spend)||$406||$288|
|Who should get this card?|
Best card for someone who doesn’t want to pay an annual fee: American Express Cash Magnet
For some rewards enthusiasts, even a $95 annual fee is way too much. If you’re someone who wants to earn cash back without paying for the privilege, the American Express Cash Magnet is a better choice.
You earn a flat 1.5 percent back on every dollar you spend. That’s $150 in rewards for every $10,000 you charge to your card, which can add up quickly when you use credit for all your regular purchases. And don’t forget the initial $150 welcome bonus you’ll earn after you use your card for $1,000 in purchases within three months of account opening.
Without an annual fee to pay, those rewards are “free” provided you pay your balance in full each month and never pay a dime in interest. Like the Blue Cash Preferred from American Express, the American Express Cash Magnet lets you redeem rewards for statement credits, gift cards or merchandise.
Best card for someone who wants a bigger introductory bonus: Blue Cash Preferred from American Express
Maybe you want a bigger introductory bonus and don’t mind paying an annual fee along the way. In that case, the Blue Cash Preferred from American Express could be your best option. This card does charge a $95 annual fee (waived for the first year), but you will get a $300 welcome bonus after you spend $3,000 on your card within six months of account opening.
The introductory bonus alone is worth more than two years of annual fees on its own, and, remember, the bonus is on top of rewards you earn on regular spending.
Best card for someone who wants to keep things simple: American Express Cash Magnet
Some people love credit cards that offer more rewards in special categories, but other people don’t have the time or the patience to keep track of categories. If you’re someone who doesn’t want to worry about bonus categories or bonus earning caps, the American Express Cash Magnet is a better choice.
The fact this card doles out 1.5 percent back on every purchase means it will leave you better off than most credit cards that only offer 1 percent back on regular spending. Plus, you’ll never have to wonder if you’re using the right card in the right place. You’ll always earn the same rate of rewards no matter what you buy.
Best card for someone who wants to maximize rewards on grocery and gas spending: Blue Cash Preferred from American Express
While not everyone wants to pay the ongoing $95 annual fee that comes with the Blue Cash Preferred from American Express, doing so could leave you with more rewards in the end. The fact you can earn 6 percent back on up to $6,000 in U.S. supermarket spending each year (then 1 percent) means you could easily earn rewards to cover this fee and have some leftover. After all, 6 percent of $6,000 in spending works out to $360 for the year.
If you spend a lot on gas as well, that’s even more reason to consider this card. You’ll earn 3 percent back on U.S. gas station spending, or $30 in rewards for every $1,000 in gas purchases at U.S. stations each year.
If you use your Blue Cash Preferred card for every purchase you make and maximize grocery and gas categories each year, you could end up well ahead of your potential earnings on the Cash Magnet card.
The bottom line
Picking up a cash back credit card is an easy way to score some rewards, but that doesn’t mean all cards in this space are created equal. The Blue Cash Preferred from American Express is best for consumers who spend a lot on groceries and gas and don’t mind paying an ongoing annual fee, but the American Express Cash Magnet could work for pretty much anyone.
Keep in mind, also, that you aren’t limited to applying for only one of these cards. The Blue Cash Preferred and Cash Magnet cards make great companions – you can use the Blue Cash Preferred strictly for purchases in its 6 and 3 percent bonus categories and rotate in the Cash Magnet card to earn 1.5 percent cash on the rest of your purchases. The correct answer to “Which of these cards should I apply for?” could be “Both!”