topic Re: American Express Blue Cash Preferred Tips for 19 year old in Credit Cards

American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 14:17:28 GMT

Hey guys, I am a 19 year old university student and applied for the AMEX cash preferred card and I was approved instantly! As excited as I am I would like some tips on how to maximize my benefits and anything else worth knowing. My credit limit is $5,500 Thanks!

Re: American Express Blue Cash Preferred Tips for 19 year old

kdm31091 — Mon, 16 Nov 2015 14:22:06 GMT

@Anonymous wrote:
Hey guys, I am a 19 year old university student and applied for the AMEX cash preferred card and I was approved instantly! As excited as I am I would like some tips on how to maximize my benefits and anything else worth knowing. My credit limit is $5,500 Thanks!

At the risk of oversimplying, you maximize the benefits by utilizing the bonus categories -- groceries, gas and department stores -- within your budget. All other spend earns 1%. I will point out that rewards must be redeemed in $25 increments (kind of annoying), and that they take two cycles to post (i.e. January's rewards show up in March).

Congrats on the approval!

Keep in mind down the road when the fee comes due, make sure you run the numbers. At 19 and as a student, your income/spend may not warrant paying $75 a year for a BCP. What is your usual grocery spend? Gas? Department stores?

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 14:54:21 GMT

@Anonymous wrote:
Hey guys, I am a 19 year old university student and applied for the AMEX cash preferred card and I was approved instantly! As excited as I am I would like some tips on how to maximize my benefits and anything else worth knowing. My credit limit is $5,500 Thanks!

Welcome to MyFico. Congrats on the approval. That is a great limit for someone as young as you. Treat it well. The BCP is a great card mainly for groceries especially. You get 6% on the first $6,000 of eligible purchases in an annual reward year at supermarkets located in the U.S. (superstores and warehouse clubs are not considered supermarkets); 3% on eligible purchases of gasoline at gas stations located in the U.S. (superstores, supermarkets and warehouse clubs that sell gasoline are not considered gas stations); 3% on eligible purchases at select department stores located in the U.S. (the current list of select major department stores at which you can get a 3% reward is available at americanexpress.com/rewards-info); and 1% on all other eligible purchases.

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 15:57:42 GMT

I will be commuting to school soon so gas will be about $30 a week or so. I spend about 50 dollars every 2-3 weeks at grocery stores. I was reading about the gift card trick at grocery stores, is this a good idea?

Re: American Express Blue Cash Preferred Tips for 19 year old

kdm31091 — Mon, 16 Nov 2015 16:02:27 GMT

@Anonymous wrote:
I will be commuting to school soon so gas will be about $30 a week or so. I spend about 50 dollars every 2-3 weeks at grocery stores. I was reading about the gift card trick at grocery stores, is this a good idea?

Define "good". Amex technically has the right to deny rewards on the GC purchases and/or close your account for "reward abuse". You can certainly do as you prefer, but note that issuers don't generally condone the "gift card trick" so you run the risk of losing the account.

$50 every 2 weeks comes out to $100 a month, so $6 a month in grocery rewards. Your gas spend will net you roughly $46 a year in rewards. So, you'd still be losing money with the fee. You probably will do better downgrading to a BCE, IMO.

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 16:14:47 GMT

@Anonymous wrote:
I will be commuting to school soon so gas will be about $30 a week or so. I spend about 50 dollars every 2-3 weeks at grocery stores. I was reading about the gift card trick at grocery stores, is this a good idea?

Since you are a student, the gift card purchased from the grocery store can be used to buy your other school supplies. So yes, you will get rewards for buying the gift card at the grocery store. This can work well if you are paying some of your own tuition also (Using the Visa/Mastercard bought from the grocery store to pay it).

Since it is capped at 6% on $6,000 a year, as long as you are responsible with the card, Amex won't give you a hard time.

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 16:17:19 GMT

@Anonymous wrote:
Hey guys, I am a 19 year old university student and applied for the AMEX cash preferred card and I was approved instantly! As excited as I am I would like some tips on how to maximize my benefits and anything else worth knowing. My credit limit is $5,500 Thanks!

Congratulations! Is this your first CC, or do you have others? I'd say the most crucial things to keep in mind are the responsible credit use practices that you may already be familiar with from other cards--always pay in full every month so that you're not paying interest (paying interest will quickly wipe out any benefit from your rewards!), always pay on time, keep an eye on your utilization percentage, and don't buy things you wouldn't otherwise buy just for the sake of maximizing rewards or using your card.

There are exceptions to that last one if you're extremely, extremely confident you can make it pay off for you and not get stuck, but it really is an important rule. So sure, if there's something you need that's available for the same price at both the grocery store and a department store, by all means buy it at the grocery store to maximize your rewards. But 6% cashback on something you don't need is still 94% spent on something you don't need. Gift cards bought at the grocery store for places you'd be spending money at anyway can be useful, but make sure fees on giftcards aren't wiping out the rewards benefit, and keep an eye on letting the CC rewards affect your budgeting instincts.

Re: American Express Blue Cash Preferred Tips for 19 year old

kdm31091 — Mon, 16 Nov 2015 16:18:51 GMT

@Anonymous wrote:
@Anonymous wrote:
Hey guys, I am a 19 year old university student and applied for the AMEX cash preferred card and I was approved instantly! As excited as I am I would like some tips on how to maximize my benefits and anything else worth knowing. My credit limit is $5,500 Thanks!
Congratulations! Is this your first CC, or do you have others? I'd say the most crucial things to keep in mind are the responsible credit use practices that you may already be familiar with from other cards--always pay in full every month so that you're not paying interest (paying interest will quickly wipe out any benefit from your rewards!), always pay on time, keep an eye on your utilization percentage, and don't buy things you wouldn't otherwise buy just for the sake of maximizing rewards or using your card.

There are exceptions to that last one if you're extremely, extremely confident you can make it pay off for you and not get stuck, but it really is an important rule. So sure, if there's something you need that's available for the same price at both the grocery store and a department store, by all means buy it at the grocery store to maximize your rewards. But 6% cashback on something you don't need is still 94% spent on something you don't need. Gift cards bought at the grocery store for places you'd be spending money at anyway can be useful, but make sure fees on giftcards aren't wiping out the rewards benefit, and keep an eye on letting the CC rewards affect your budgeting instincts.

Excellent points that need to be mentioned more often around here Don't overspend for rewards and stick to a budget, and watch prices. Don't always get something at the grocery for the rewards if it may be cheaper elsewhere.

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 16:34:01 GMT

My math says $220+ a month at grocery stores if all fuel was in gift card form. Thats double the AF. vs 3% no fee version. Any spend past that on preferred puts that one way ahead.

I go over the numbers many times because that is the Card I really really want myself because my fuel cost is $100 a week

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 20:04:55 GMT

@Anonymous wrote:
My math says $220+ a month at grocery stores if all fuel was in gift card form. Thats double the AF. vs 3% no fee version. Any spend past that on preferred puts that one way ahead.

I go over the numbers many times because that is the Card I really really want myself because my fuel cost is $100 a week

If gift cards make sense for the OP's gas buying habits, that's a good point... funneling gas costs through the 6% category could be a good way to get more value out of the AF.

That said, in the OP's situation I might app for a 3% gas card like BoA Cash Rewards, and downgrade to the BCE if approved--immediately if I could get the AF waived or very heavily prorated, which I think Amex usually will do, or after the first year. With the spending estimates given, 3% on gas with BoA plus 3% on groceries on BCE without an AF would net only ~$8 less than the BCP does in the best case scenario where all fuel cost is funneled through grocery gift cards.

But OP, I also don't want to rain on your parade too hard and minimize your excitement! If what I've heard about Amex prorating annual fees is correct, you can always try things out with the Preferred for 6 months, and reevaluate once you've got a better feel for the cost vs. benefit on adjusting your spending to make up for the AF. The most important thing is that you build a great payment history with your new card without getting caught in any interest traps; that's the first step towards winning this game

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 21:24:57 GMT

Does anyone know if the year for the $6000 limit on supermarkets is a calendar year or based on anniversary of card?

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 21:32:37 GMT

@Anonymous wrote:
Does anyone know if the year for the $6000 limit on supermarkets is a calendar year or based on anniversary of card?

For BCE/BCP it is calendar year. Check on the website for these questions!

An annual reward year is 12 billing periods in a row beginning with the one that includes January 1st; if your billing cycle changes, the length of your annual reward year will also change.

So, if you got this card say a month ago, you should be able to get some rewards this year and then start with a fresh cap once your Jan statement closes.

For reasons best known to Amex, these rules don't apply to all cards. The Blue Cash (OBC) runs on anniversary year.

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 21:33:59 GMT

@kdm31091 wrote:
@Anonymous wrote:
I will be commuting to school soon so gas will be about $30 a week or so. I spend about 50 dollars every 2-3 weeks at grocery stores. I was reading about the gift card trick at grocery stores, is this a good idea?
Define "good". Amex technically has the right to deny rewards on the GC purchases and/or close your account for "reward abuse". You can certainly do as you prefer, but note that issuers don't generally condone the "gift card trick" so you run the risk of losing the account.

$50 every 2 weeks comes out to $100 a month, so $6 a month in grocery rewards. Your gas spend will net you roughly $46 a year in rewards. So, you'd still be losing money with the fee. You probably will do better downgrading to a BCE, IMO.

That's $118 a year. Since the AF is $75, how would they be losing money?

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 21:43:53 GMT

@Anonymous wrote:
@kdm31091 wrote:
@Anonymous wrote:
I will be commuting to school soon so gas will be about $30 a week or so. I spend about 50 dollars every 2-3 weeks at grocery stores. I was reading about the gift card trick at grocery stores, is this a good idea?
Define "good". Amex technically has the right to deny rewards on the GC purchases and/or close your account for "reward abuse". You can certainly do as you prefer, but note that issuers don't generally condone the "gift card trick" so you run the risk of losing the account.

$50 every 2 weeks comes out to $100 a month, so $6 a month in grocery rewards. Your gas spend will net you roughly $46 a year in rewards. So, you'd still be losing money with the fee. You probably will do better downgrading to a BCE, IMO.
That's $118 a year. Since the AF is $75, how would they be losing money?

So that's a profit of about $43

With the BCE, the $100 a month would be $3 a month, so a total of $36 for groceries and around $28 for gas, so $64 profit

If the gas is bought with gift cards, then the BCP will look better, but you lose some flexibility (have to go to the gas station you have gift cards for)

Re: American Express Blue Cash Preferred Tips for 19 year old

kdm31091 — Mon, 16 Nov 2015 21:45:16 GMT

Subtracting the fee 118-75, OP would get 43 bucks from the BCP, and the BCE would get them 67 since it has no fee. So yes, theyll lose money with BCP unless they spend a lot on other things.

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 22:53:25 GMT

@kdm31091 wrote:
Subtracting the fee 118-75, OP would get 43 bucks from the BCP, and the BCE would get them 67 since it has no fee. So yes, theyll lose money with BCP unless they spend a lot on other things.

Yes, I have long railed (too long) here that IF the goal is only rewards, then the question to ask is not "will I make a profit on this card" which is easy for nearly every card.

Instead ask "Of the cards I can reasonably expect to get, which one, given my spending, and existing cards, will maximize my profit after fees?" Profit includes cashback, travel rewards valued as you wish, things like Amex Offers, and of course sign up bonuses

Now not everyone has the "pure" rewards-only goal, there are other things that come into play: some stupid, *I mean distracting, IMO!) like "getting in with bank X", CLI policty, "prestige" etc. whereas others certainly could come into good decision making if appropriate: low/0% initial APR period, whether getting this card with this issuer will make it harder to get another card with this issuer etc.

Re: American Express Blue Cash Preferred Tips for 19 year old

kdm31091 — Mon, 16 Nov 2015 22:56:36 GMT

Even using amex offers as a way to offset the fee is kinda iffy, considering you may get the same offers on a BCE and be in pure profit vs offsetting a fee.

I too dont get/agree with the "getting in with bank x" thing and I dont think I ever will, but some people feel it makes a difference for later approvals.

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Mon, 16 Nov 2015 23:00:39 GMT

@kdm31091 wrote:
@Anonymous wrote:
I will be commuting to school soon so gas will be about $30 a week or so. I spend about 50 dollars every 2-3 weeks at grocery stores. I was reading about the gift card trick at grocery stores, is this a good idea?
Define "good". Amex technically has the right to deny rewards on the GC purchases and/or close your account for "reward abuse". You can certainly do as you prefer, but note that issuers don't generally condone the "gift card trick" so you run the risk of losing the account.

$50 every 2 weeks comes out to $100 a month, so $6 a month in grocery rewards. Your gas spend will net you roughly $46 a year in rewards. So, you'd still be losing money with the fee. You probably will do better downgrading to a BCE, IMO.

6 x 12 =72

+ 46 = 118. Not losing money on the fee, but not maximizing either. Not to mention that when estimating as such most people underestimate their actual gas and grocery spend until they actually look at it when its all in one place.

Re: American Express Blue Cash Preferred Tips for 19 year old

kdm31091 — Mon, 16 Nov 2015 23:05:27 GMT

As discussed above though, the profit earned from BCP (118 - 75 fee) would be 43, whereas the no fee BCE would give 64. So unless the underestimating is pretty significant, BCE is probably better reward wise. However OP can just try out BCP for a year and see how it goes.

Re: American Express Blue Cash Preferred Tips for 19 year old

Anonymous — Tue, 17 Nov 2015 01:48:20 GMT

plus the sign up bonus is better on the BCP is better by 50 bucks so that pretty much levels the field for year 1.