Fine Prints Matter: The Truth About 6% Cash Back

The credit card companies are one-upping each other for your business. I’m sure you’ve seen the commercials everywhere: 1, 2, 3, or even 6% cash back annually for certain purchases. Fortunately, they tend to be stores where we spend most of our money anyway, like grocery stores and gas stations. I’ve even read rumors on the blogosphere of a 10% cash back. That is pure insanity. For them at least. For us, it’s about time we get a break.

While they usually cap how much you can get the maximum cash back on over the course of the year, most of us are unlikely to hit the cap unless we are having kids by the dozen and driving across the state for work. For example, AmEx limits their 3-6% cash back for gas and groceries respectively, on $6,000 worth of purchases annually, for each category. That amounts to $500 a month in purchases. While some people have large families and may spend that much on food, I can’t imagine the average person spending that on gas, especially with the way prices have been at the pump lately. Although, when you do reach your max, you’re not quite out of the game. The cash back is still available, albeit at 1% of any amount over $6,000.

Are you wondering if there is a catch? If not, you should be. It’s all in the fine print: No warehouse stores. Your local Costco’s BJ’s and Sam’s Clubs do not count as “groceries” and same goes for any BJ’s gas stations. That catch kills the attractiveness of these cards for me, since the per unit cost of food at my local Stop & Shop is marked up much more than 6% when compared to BJ’s. I while I go to the neighborhood supermarket as regularly as I go to the local wholesale club, I don’t spend nearly as much there. We’re talking $100-150 versus $200-300. Even then, that money is spent exclusively on sale items. After comparing prices for years, I can’t justify paying regular prices at the supermarket. For example, regular price for grapes at BJ’s is $2.09/lb. It’s $3.99 at the other store. If they have a sale, it will be $1.99. Only then is it worth shopping there. Paying 90% more for 6% cash back is not a reasonable move for me.

Same goes for the gas cash back. The BJ’s gas station is conveniently located in the same complex as the BJ’s store and it’s consistently 10-15¢ cheaper than the local pump. With 2 cars to fill up, the 3% is also lack luster relative to the mark up at the Mobil or Shell stations.

However, your situation may be completely different from mine. Not everyone will be within 10 miles of a warehouse club, and even less people will have access to their gas stations. Although if you are in a similar situations and you’ve had the same dilemma, I’m here to tell you that the numbers have been crunched and the math doesn’t add up. Unless you’re already spending a lot of money at those places, the benefit of the reward is marginal. I’ll take 1.5% with a 20% discount over 6% off an overpriced product any day.


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