USA   |   UK   |   Australia   |   Canada
ADVERTISEMENT

Groceries bought at Wal-Mart, Costco don't earn extra rewards

Food, gas bought at big-box stores, warehouse clubs excluded

By

Cashing In
Cashing In columnist Cathleen McCarthy
Cathleen McCarthy is a journalist whose articles on travel, commerce and consumer topics have appeared in dozens of publications. She writes "Cashing In," a weekly column about credit card rewards programs, for CreditCards.com

Ask a question.

'Cashing In' archive

Question for the CreditCards.com expert Dear Cashing In,
A lot of credit cards give extra points for grocery store purchases. How do you find out what they count as a grocery store? I buy most of my groceries from Wal-Mart, Target and Costco a lot. Do those count?
-- Supermarket shopper

Answer for the CreditCards.com expert Dear Supermarket shopper,
The answer to your question lies in the merchant category code assigned to a store by each credit card processor (MasterCard, Visa, American Express, etc.). Generally, processors do not count big-box stores (Target and Wal-Mart) or warehouse clubs as grocery stores or supermarkets. So, you probably won't be eligible for bonus points if you use a more general rewards card that awards points for the "groceries" category per se.

If you don't want to change your shopping habits, your best bet may be to get a Target credit card, which gives you 5 percent off of every purchase you make there. Wal-Mart and Costco also have co-branded credit cards, but their programs are not any more rewarding than most standard rewards cards. The American Express True Earnings card from Costco gets you 1 percent cash back on groceries anywhere you buy them. And the Wal-Mart Discover card offers up to 1 percent cash back on all purchases (0.25 percent on purchases up to $1,500, 0.5 percent on purchases from $1,500.01 to $3,000 and 1 percent on purchases over $3,000).

If you're open to shopping at stand-alone supermarkets, you might want to look at the AmEx Blue Cash card -- one of the most generous cards for grocery rewards. It offers 3 percent cash back on the first $6,000 you spend on groceries annually. Its terms and conditions state that rewards are only honored on purchases made at U.S-based supermarkets that offer "a wide variety of food and household products such as meat, fresh produce, dairy, canned and packaged goods, household cleaners, pharmacy products and pet supplies." While that would seem to describe Wal-Mart, Target or Costco, the terms specify "superstores, convenience stores and warehouse clubs are not considered supermarkets." 

Other places that don't count toward that 3 percent grocery reward: specialty food retailers, small corner grocery stores, gourmet shops, natural food sellers and large superstores including online superstores such as Amazon.

Another good card for this category is the BankAmericard Cash Rewards Visa card, which offers 3 percent on gas and 2 percent on groceries for a combined maximum of $1,500 per quarter. By "groceries," they mean any item purchased at grocery stores/supermarkets, freezer/meat lockers, candy/nut/confection stores, dairy product stores and bakeries. They do not reward for purchases (including groceries) made at "discount stores" or "wholesale clubs." 

Likewise, those cards don't reward gas purchases if they're not made at "eligible gas merchants" (service stations and automated fuel dispensers). Why? Because other merchants process your purchase under a different code, one the card processor doesn't recognize as "gas."

When looking for credit cards that reward you for your ongoing, everyday purchases (a smart thing to do!), always review the terms and conditions to see what that means exactly. There's usually a link on the application page, if you look closely. 

It's important to remember that category rewards are not based on the products you're purchasing -- in this case, groceries -- but on the venue where you buy them. It's the same with "office supplies" on business cards such as Chase Ink. You're getting 5 points per $1 for using your card at office supply stores, not because you're necessarily buying office supplies. You could buy dish detergent at Staples and still get the 5-point bonus, but you won't get it for buying office supplies at a grocery store.

See related: Infographic: Groceries top list of most popular rewards programs, What's the best low-hassle cash-back card?, Reduce gas pump pain with retailer reward cards

Meet CreditCards.com's reader Q&A experts
Vexed by a personal finance problem? CreditCards.com's Q&A experts answer questions from readers every weekday. Ask a question, or click on any expert to see their previous answers.
Gary Foreman, New Frugal You columnist Gary Foreman,
"New Frugal You"
Sally Herigstad, To Her Credit columnist Sally Herigstad,
"To Her Credit"
Tony Mecia, Cashing In columnist Tony Mecia,
"Cashing In"
Barry Paperno, Speaking of Credit columnist Barry Paperno,
"Speaking of Credit"
Elaine Pofeldt, Your Business Credit columnist Elaine Pofeldt,
"Your Business Credit"
Erica Sandberg, Opening Credits columnist Erica Sandberg,
"Opening Credits"

Published: July 2, 2013


If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

Three most recent Cashing In stories:

Share This Story




Follow Us!


Credit Card Rate Report

Updated: 07-29-2014

National Average 15.03%
Low Interest 10.37%
Balance Transfer 12.64%
Business 12.80%
Student 13.27%
Cash Back 14.91%
Reward 15.00%
Airline 15.46%
Bad Credit 22.73%
Instant Approval 28.00%

ADVERTISEMENT
ADVERTISEMENT