The American Express Blue Cash credit card is probably the most dangerous cash back credit card on the market today.  It offers two enticing features – 5% cash back rewards and a 0% introductory APR that lasts up to 12 months – but its complicated cash back program, tricky 0% intro offering and extremely high long term interest rate make this a card that should only be used by pros.

Earning Cash Back with American Express Blue Cash

American Express Blue Cash has long been one of the highest yielding cash back credit cards, but to earn 5% cash back you need to be a pretty heavy spender.  On the first $6,500 spent annually, cardmembers only earn 1% cash back on gas, grocery and drug store purchases and a paltry 1/2% on all other purchases. This is a far cry from 5% and less than can be earned with most other cash back credit cards.

Once you pass $6,500 in spending, the 5% cash back rate kicks in on everyday purchases and all other purchases earn a respectable 1.25%. This is good for cardmembers who use Blue Cash for all their purchases and spend $20,000 or more per year, but not so great for less active credit card users who might only earn 5% cash back on a small fraction of their yearly spend.

Those who spend heavily on groceries and gas benefit the most. With $20,000 of spending, it is possible to earn between $400 and $500 with Blue Cash. This translates into an overall cash back return of 2-2.5%. This is above average and a good deal, but only if this card is used like a charge card and all purchases are paid in full every month.

The Dangers of Using Blue Cash

Although Blue Cash offers an above average opportunity to earn cash back rewards, both the introductory and long term interest rates of this card can present problems. New customers get a 0% rate on purchases  for “up to 12 months”. However, this intro rate can be as short as 6 months, based on a review of the applicant’s credit.

Since the length of the 0% rate is not determined until American Express reviews applications, people who don’t read the fine print closely may mistakenly believe that they have a longer 0% period than they actually get. This can cause trouble when the regular interest rate kicks in, especially for people who run up balances with the intention of paying them off in a year, rather than six months.

Even cardholders who don’t get tripped up by the tricky 0% introductory terms can run into serious trouble if they use Blue Cash like a credit card instead of a charge card. The lowest possible long term interest rate on this card is 17.24%. This is the rate consumers with pristine credit get. Others may get rates of 19.24% and 21.24%.

Final Thoughts on Blue Cash

Consumers who spend heavily and pay their credit card balances off every month can benefit from Blue Cash. Unfortunately, using this card is a bit like playing credit card Russian roulette. The allure of earning 5% cash back coupled with a tricky 0% introductory rate can entice consumers into running up balances on this card that will be subject to very high interest rates.

If you never have problems paying off your credit cards on a monthly basis, this is not an issue. But any consumer that carries balances from month to month will end up paying much more in interest then they could possibly earn via cash back rewards. Thus, while all credit cards should be used with caution, Blue Cash must be used with extreme caution.

For information on alternatives to Blue Cash that offer cash back, but lower interest rates, please see the cash back credit card promotions page. 

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