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Updates: Some offers mentioned below are no longer available. View the current offers here – Blue Cash Preferred Card from American Express
TPG reader Chris tweeted me to ask:
@thepointsguy- “In your opinion, what is the best credit card for making purchases at the grocery store?”
Credit card spending bonuses can be an easy way to rack up miles. These days, you can find cards that offer bonuses in a wide variety of spending categories, from office supplies and cell phones to dining and, as Chris wants to know, groceries. When considering which card to get for a given bonus, you should first think about how much you spend in that category.
Let’s say the average family spends about $200 each week on groceries. That’s $10,40o per year. Of course, many of us spend more than that, and many spend less, but this is a reasonable estimate (according to the USDA). Which card makes the most sense here?
One strong option is the Amex Everyday Preferred card. This card gives you three points per dollar spent on up to $6,000 for grocery purchases, and one point per dollar for everything above that. For $10,400 in spending on groceries, you would earn at least 22,400 Amex Membership Rewards points annually. In my September monthly valuations, I list Membership Rewards at 1.8 cents per point, so those points earned from your grocery purchases would be worth over $400.
Additionally, if you hit 30 transactions per month on the Everyday Preferred card, you get a 50% bonus on all points earned, so that could boost your return to over $600 annually. After you factor in the $95 annual fee, you’re still looking at over $500 in value per year from your grocery spending, which is pretty hard to beat. In comparison, a 2% cash back card like the Fidelity Investment Rewards card from Amex would offer only around $220 per year in value from that $10,400 grocery spend. Everyday Preferred also comes with a sign-up bonus of 15,000 Membership Rewards points after you make $1,000 in purchases in the first 3 months, so your return will actually be even better in the first year.
There are a few other cards that could work to maximize grocery shopping. First, there’s the non-preferred version of the American Express Everyday card. This card has no annual fee, but you only earn two points per dollar spent on groceries (again, on up to $6,000 in spending annually). Also, the transaction bonus is 20% instead of 50%, but requires only 20 transactions per month instead of 30. This card has a sign-up bonus of 10,000 Membership Rewards points after you spend $1,000 in the first three months.
Remember that this isn’t cash back, however; my valuations of points like Membership Rewards are based on the return you can get by maximizing transfer partners like British Airways. You can really get much more than 1.8 cents per point with the right redemption; that value is just an average.
Another card to consider is the Hilton HHonors Card from American Express, which gives five Hilton HHonors points per dollar spent on groceries. The only problem here is that in my opinion, Hilton HHonors points are only worth about half a cent apiece, so you’re only looking at about $260 in value from your annual grocery spending.
The Blue Cash cards from American Express are other options. The Amex Blue Cash Preferred gives 6% back on the first $6,000 in grocery spending annually. When you subtract the $75 annual fee, you should get about $330 in value here. The American Express Premier Rewards Gold card is another choice, but the $175 annual fee and the fact that Amex is removing the 15% bonus for $30,000 in annual spending really decrease the value, which I would estimate at around $200 if you were just using it for groceries.
Do take into consideration that you’ll probably use your card for more than just groceries, but either way, the Amex Everyday cards are likely the best in this situation. If you want more personalized feedback on how to boost your rewards, check out the TPG Maximizer, which helps you weigh your options and recommends the best credit card for you based on your spending habits and travel interests.
If you have any other questions, please tweet me @thepointsguy, message me on Facebook, or send me an email at email@example.com.