American Express Raising Annual Fee on Blue Cash Preferred

One of our favorite cash-back credit cards is getting a little more expensive: The annual fee on the Blue Cash Preferred® Card from American Express will be $95 ($75 if your application is received by 8/3/16). That’s a $20 increase from before — not huge, but it changes the break-even point at which the rewards make up for the cost of carrying the card.

Here’s what the change will mean for you.

The basics of the Blue Cash Preferred® Card from American Express

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First, let’s look at what won’t change about the Blue Cash Preferred® Card from American Express. The card’s stellar rewards are sticking around. You still earn 6% cash back on up to $6,000 in grocery store purchases annually, plus an unlimited 3% on gas station and select department store purchases. All other spending earns 1% cash back.

The card also comes with a sign-up bonus: Earn $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive the $150 back in the form of statement credits.

» MORE: Read our full review of the Blue Cash Preferred® Card from American Express

When the new annual fee takes effect

The annual fee for the Blue Cash Preferred® Card from American Express has been $75. If you don’t have the card, applying by Aug. 3, 2016, will give you a year at the old rate. After that, the fee will go up to its new level.

For existing cardholders, your account renewal date determines when the new fee goes into effect.

“Existing card members will be charged $95 upon renewal beginning in September,” says William Tsang, director of public affairs for American Express. “So, if your card renews in July, you won’t see a $95 [fee] until next July.”

» MORE: NerdWallet’s best cash-back credit cards

The break-even point

Until now, you needed to spend about $25 per week on groceries to earn enough rewards to cover the annual fee on the Blue Cash Preferred® Card from American Express, according to NerdWallet’s calculations. With the new fee, you’ll need to spend about $31 per week on groceries to break even. That’s still an accessible amount for most people.

The increased annual fee also changes the calculations we use to compare the Blue Cash Preferred® Card from American Express with its cousin, the Blue Cash Everyday® Card from American Express. That card has an annual fee of $0 but pays lower rewards rates — only 3% back on up to $6,000 in grocery store spending and an unlimited 2% back at gas stations and select department stores. It also offers 1% cash back on all other spending.

If you spend at least $61 per week at grocery stores, you’ll earn more rewards with the Blue Cash Preferred® Card from American Express than you would with the $0-fee version.

» MORE: Read our comparison of the Blue Cash Everyday® Card from American Express and the Blue Cash Preferred® Card from American Express

Is the Blue Cash Preferred® Card from American Express still a good deal?

That depends on how much you spend on groceries and gas. For many people, the high rewards rate on groceries alone can cancel out the annual fee fairly easily.

If you’re allergic to paying any annual fee whatsoever, you might be happier with one of our best no annual fee credit cards.

Virginia C. McGuire is a staff writer at NerdWallet, a personal finance website. Email: virginia@nerdwallet.com. Twitter: @vcmcguire.

from NerdWallet
https://www.nerdwallet.com/blog/credit-cards/american-express-raises-annual-fee-blue-cash-preferred/