American Express Blue Cash—Hey Big Spender…

New York, NYA lot of consumers are confused about their American Express Blue Cash credit card cash-back ratio. Amex advertises "up to 5 percent cash back" but AMEX leaves the details to the fine print.

This is how it really works: Until you spend at least $6,500 total on your Blue Cash card, you receive 1 percent on grocery, gas and drugstore purchases, and only 0.5 percent on all other purchases. Only after you have spent $6,500 (that's $540 per month), do you start earning the full 5 percent on grocery, gas and drugs and 1.5 percent on everything else. As well, your first $6,500 in spending doesn't count: it is not retroactively included and only the amount over that $6,500 threshold gets the 5 percent /1.5 percent rate.

Not only do you have to make substantial purchases to reach the 5 percent ratio, you are also limited in where you spend.

For consumers who don't make big purchases, Blue Cash isn't such a great deal after all. There are other credit cards which are not tiered and offer this level of cash back or more. Other cards offer 3 percent cash back from the first dollar spent, so it would be a good idea to shop around, especially in this economic climate—credit card companies are working hard to get your hard-earned dollar.

Tom and his wife managed to get up to an overall cash-back ratio of 1.95 percent, " but that percentage would be higher if Blue Cash was the only card we ever used," says Tom. "There are numerous places nearby, where we regularly shop that don't accept AMEX."

And some places don't accept the card. "The Blue Cash card isn't accepted in many departments of superstores or warehouse clubs," says Eduardo." I do 90 percent of my shopping at Walmart and Costco to get their lower prices. By the time I reach that $6,500, I would have fewer goods to show for my money, which would effectively cancel-out that 5 pecent rebate." Eduardo says he only uses credit cards that count all purchases, so he can shop around for the lowest prices and get a rebate.

"Although Costco does take AMEX, there are AMEX cards that offer rewards for all purchases, like the AAdvantage AMEX," he adds. "They aren't as good as cash but at least you get something. This so-called 5 percent Blue Cash card gives you nothing for Costco purchases."

John said that AMEX Blue Cash is a good choice for people who spend a lot and don't want to juggle plastic for the optimal rewards. "The tiers suck for people who don't spend a lot though. If I was spending a ton I'd definitely consider it. For me, I prefer to use a combination of cards."

Consumers might find themselves spending more than they planned just to hit that higher ratio. Some experts say people spend more when they have plastic and trying to reach that $6,500 can almost make for bigger spending...