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Use Math to Find the Best Credit Cards for Grocery Shopping

Grocery shopping is one of the heaviest spending for our daily life. Of course, the rent is another big spending, and I have covered it in this post: Complete Guide to Make the Rent Payment Smartly Today, I am going to do some math for you.

You may say the American Express Blue Cash Preferred card is the best Grocery shopping cards, as it offers 6% cash back. It comes with $400 welcome bonus, but also has $95 annual fee. The 6% cash back for grocery shopping also capped with $6000 spending per year (1% after that).

$6000 spending per year, means $500 per month, for a family with 3-4 people, should be enough for grocery. Therefore, if you apply for this card, the first year, your profit will be $400+$6000*6%-$95, which is $665. However, if you keep this card for 2 or more years, your annual profit from second year will be $6000*6%-95, which is $265.

American Express also have a Gold card, which offers$ 90,000 points welcome bonus and 4X points for grocery shopping up to $25000 per year but has a $250 annual fee. If you still have only $6000 spending per year, the first-year revenue would be 90,000 points+6000X4=114000 points. The cost would be $250. If you keep it for 2 or more years, the revenue from the second year would be 24000 points, but the cost is still $250.

So, the question would be, how much does the point worth? The American Express point has multiple applications, you can redeem for cash, airline/hotel points, or gift cards, the value can vary from 0.6cent/point-2.5cent/point. If you value the point 0.6 cent, the second year is obviously negative profit.

However, the gold card also has $240 benefits per year, including $120 Uber eat credit, and $120 food credit for Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, Milk Bar and select Shake Shack locations. Someone says these benefits make the “real” annual fee is only $10. For me, normally I won’t buy food through Uber eat or any these restaurants, because I don’t think their price is decent. For example, I eat order the same dish from my favorite restaurant, and at least 10% cheaper that I order from delivery service such as Uber eat or Grubhub. Therefore, this real value is $240 benefit for me is only $ 220 or even $200. The equivalent annual fee for me, is $30 or $50. If I value the point at 1.1 cents, the second year for me, under the $6000 spending, is still less profit than Blue Cash Preferred.

Actually, my annual spending on grocery is far more than $6000. Why? I explain it in this post: Dump the Gas Price Part 1: Kroger’s Secret. My annual spending may be around $12000 for grocery, so at least I can get 48000 points using gold card and equals $528 for cash. If I use these points for airline, it can worth around $1000! If I am using Blue cash Preferred, since it has a $6000 cap, I only get 6000*6%+6000*1%=$420, which is a fixed return. Obviously, for a larger spending, using the gold card, you will get more rewards and high flexibility.

This analysis is an example to understand a credit card with your real demanding, also you need to know the feature of the card in detail. Everyone has his own situation, so there should be the diversity to choose the right card. When you browse the internet, there are many credit cards reviews or advertisements. You cannot just follow other people’s recommendation. Understand the condition of yourself, is more important!

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