Cashing In Q&A columns

Watch out for limits on rewards card category bonuses


If you’re planning on spending a lot on a card in a certain category, make sure you know the limit to what you can earn so you can maximize your rewards.

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Dear Cashing In,
I spend about $3,000 a month on groceries at Whole Foods for work. I pay my card off every month. What is the best credit card to use? – Tommy

Dear Tommy,
First, a few tips of the hat to you. Congratulations on paying off your card every month. That’s essential to getting the most out of your rewards, because penalties and interest payments quickly add up.

Second, it is smart of you to use your card for work purchases. Assuming your employer pays you back and you continue to pay off your card balance each month, you’re essentially receiving rewards for free.

Now let’s get to the type of reward card that would be best for this situation. Keep in mind you are also going to want to consider whether you prefer rewards in cash, bank reward points or some other type of reward.

Ordinarily, since you mention grocery spending, we would think of looking for a card that gives big bonuses for shopping at supermarkets. That’s true, but it is only a part of what we must consider.

There are a number of cards, especially from American Express, that reward U.S. supermarket spending. American Express offers the EveryDay card (no annual fee, 2 rewards points per $1 on U.S. supermarket purchases), the Blue Cash Everyday® Card from American Express (no annual fee, 3 percent cash back on U.S. supermarket purchases on up to $6,000 in purchases per year, then 1 percent), the EveryDay Preferred card ($95/year, 3 rewards points per $1 on U.S. supermarket purchases) and the Blue Cash Preferred® Card from American Express ($95/year, 6 percent cash back on U.S. supermarket purchases on up to $6,000 in purchases per year, then 1 percent). Some of these also have minor introductory bonuses that make them more attractive as well as category bonuses in other areas.

Those would be fine for most people, but since you are talking about a high level of spending – $3,000 a month, or $36,000 a year – they might not be right for you, because each of them caps the bonus points for U.S. supermarket purchases after spending $6,000 in a year. After that, you’d earn just 1 percent back or 1 point per $1, which dramatically reduces the appeal of these cards. Even with the card with the largest cash back rewards on U.S. supermarket purchases, the Blue Cash Preferred, you would take in just $565 on $36,000 in annual spending (after subtracting the annual fee).

Instead, you’ll want to look for a card that has no limits on the amount of purchases eligible for category spending or that has a high regular rewards rate with no limits. For example, the Citi Double Cash card (no annual fee) gives up to 2 percent back on all purchases (1 percent when you buy, 1 percent when you pay your bill on time), so that would be $720 on $36,000 in annual spending.

If you are a fan of Hilton hotels, you might also consider the American Express Hilton Surpass card (annual fee: $75, rises to $95 on Jan. 18, 2018). It gives 6 Hilton points per $1 spent at supermarkets, with no limits, as well as bonuses on spending at Hiltons, restaurants and gas stations. It comes with Hilton Gold status, which gives you perks such as late checkout. It also gives you a free weekend night annually if you spend at least $15,000 on the card. With the sign-up bonus (currently 75,000 points) and $36,000 in annual spending on groceries, you would have nearly 300,000 Hilton points, which you could use to stay nearly a week at a midrange property, or a few nights at a top-tier resort.

You might examine the details of that one, and if it is too complicated or does not appeal to you, a simple cash back card with a good rate might do the trick.

See related: What’s the best reward card for a single big purchase?, Credit cards, rewards programs add up to savings at the grocery store

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