Groceries bought at Wal-Mart, Costco don't earn extra rewards
Food, gas bought at big-box stores, warehouse clubs excluded
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
Dear Cashing In,
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?
Dear Supermarket shopper,
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."
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.
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."
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."
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
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.
Published: July 2, 2013