Grocery rewards maximizers discuss making the most of credit card rewards regularly in communities like r/CreditCards*. Many of the users here have sound advice for people searching for credit card recommendations. Grocery credit cards are among the most commonly discussed cards because this is a major spending category for nearly everyone.
One user remarked that between two of the most rewarding grocery credit cards, the Citi Custom Cash and the Amex Blue Cash Preferred cards, the Blue Cash Preferred is only a good card for one year. They argued that because of the $6,000 yearly spending cap, “the best rewards rate you can achieve on grocery spending alone is only 4.4 [percent]. If you spend anything else besides exactly $6,000 on groceries (higher or lower) then the effective cash back rate is even worse.”*
And a user in another thread argued the Citi Custom Cash wins because it doesn’t have an annual fee.
“The best thing is that [it] is always 5 [percent] cash back for the first $500 per month,” another Redditor commented about the Citi Custom Cash. “It works for me as I usually don’t spend more than that per month on groceries.”*
Here’s how people online break down the math: The Blue Cash Preferred earns 6 percent back on up to $6,000 spent every year, then 1 percent. Users point out that if you spend exactly $6,000 per year at U.S. supermarkets with the card, you’ll earn $360 — a 6 percent return for the $6,000 spent. However, when you subtract the annual fee from your earnings, you’re left with $265 — a 4.4 percent return on $6,000 spent.
This is an interesting way to frame cash back because it presents it as a lump-sum return for a set amount spent rather than a per-purchase bonus, which is often how people view rewards. If you spend $4,500 at U.S. supermarkets each year with the Blue Cash Preferred card, you’ll earn $270 in cash back, which turns into $175 after the annual fee — only a 3.8 percent return for your spending. The further you are from spending $6,000 with the Blue Cash Preferred, the lower the overall return you’ll see, no matter how high the card’s cash back rate is.
However, the Citi Custom Cash beats the Blue Cash Preferred’s overall rate with its 5 percent cash back (on up to $500 spent in your top category each billing cycle, then 1 percent) without an annual fee. And if you spend $3,200 or less on groceries each year, a card that earns 3 percent back on U.S. supermarket purchases will also beat the Blue Cash Preferred’s rewards rate every year you pay its $95 annual fee.
*The quotes and citations included on this page have been verified by our editorial team and are accurate as of the posting date. Be sure to check the issuer's website/terms and conditions for all up to date content. Outlinked content may contain views and opinions that do not reflect the views and opinions of Bankrate.