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Poll: Cardholders say they earn most of their rewards from groceries

Travel is a popular way to earn points, but consumers spend the least on it

Summary

Rewards card holders say grocery shopping is their most lucrative way of earning points and cash back, according to a new CreditCards.com poll.

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Rewards card holders say grocery shopping is their most lucrative way of earning points and cash back, according to a new CreditCards.com poll.

The scientific survey of U.S. consumers also revealed travel is the second most productive way credit card holders earn their rewards – despite the fact that consumers spend less on it than groceries, gas and dining. In total, 35 percent of card users ranked groceries as their top rewards-earning spending category, followed in percentage of first-place votes by travel (27 percent), gas (23 percent) and dining (14 percent).

Groceries are also by far the biggest household budget item among all survey respondents, accounting for $540 in spending per month, on average. Respondents said they spend $167 on dining, $158 on gas and $152 on travel each month on average.

The results suggest many card holders are doing a great job of matching their rewards with their spending habits. And those with excellent credit could yield even more returns now that some premium travel cards are offering more rewards for non-travel spending.

“Finding the card that matches your spending habits can definitely help you out a lot,” said Jason Decker, owner of the Travel Rewards Coach website. “With the way travel cards are starting to be structured, they’re really trying to keep you as a long-term customer.”

Here’s what else our survey found about cardholders’ rewards strategies and spending:

  • A millennial myth debunked. Despite the popular perception that millennials are travel junkies, the 18-37 age group was least likely to rank travel as their highest rewards-earning spending category. They also spend less on it than any other generation.
  • Travel and dining rewards popular on the coasts. Rewards card holders in the West were significantly more likely than those in the South and Midwest to say they earn most of their rewards from travel. And Northeasterners are more prone to earn points and cash back from dining than Southerners and Midwesterners.
  • Gas is tops down South, groceries win in the Heartland. Cardholders in the South were most likely to say gas stations fueled most of their rewards earnings, while Midwesterners singled out grocery shopping as their biggest source of rewards.
  • Chivalry rewarded. Men were more likely than women to say they earn most of their rewards from dining and gas – perhaps because guys are more apt to pick up the check and fill up the car.

The survey of 1,055 U.S. adults was conducted between Nov. 20-25, 2018. See survey methodology

There’s a rewards card for nearly every type of spending

With so many rewards credit cards on the market today, it’s easy to tailor your card selection to your spending habits.

Spend most of your money on groceries and never eat out? The Blue Cash Preferred® Card from American Express offers 6 percent cash back at U.S. supermarkets, on up to $6,000 in spending per year (after that it’s 1 percent). And if you don’t want to pay that card’s $95 annual fee, the no-annual-fee Blue Cash Everyday® from American Express offers 3 percent cash back at U.S. supermarkets (up to $6,000 in purchases per year, then 1 percent).

If you dine out all the time and rarely, if ever, turn on your stove, there are cards for you, too. One example is the Capital One Savor Cash Rewards Credit Card, which offers 4 percent cash back on dining – and also 2 percent at grocery stores, for those occasional nights when you prefer to stay in and cook. It has a $95 annual fee ($0 in year one), but it also has a no-annual-fee alternative, the Capital One SavorOne Cash Rewards Credit Card, that offers 3 percent cash back on dining.

Avid travelers have a bevy of options as well. The Chase Sapphire Reserve has been regarded by many travel junkies as a must-have ever since it was released in 2016, offering 3X points on travel after you earn a $300 travel credit.

It also offers a 50,000-point sign-up bonus after you spend $4,000 within the first three months of card ownership. Those points are worth $750 in travel if you redeem them through Chase Ultimate Rewards – more than enough to cover the card’s hefty $450 annual fee in the first year.

Other top travel-friendly cards include the Capital One Venture Rewards Credit Card, the Wells Fargo Propel American Express® card and the soon-to-be revamped Citi Prestige.

See related: Looking ahead to credit card bonus categories in 2019

Don’t settle for less than one cent per point

Despite all the great options out there, it seems unlikely we’re all getting the most from the rewards cards in our wallets.

Perhaps you signed up for a glitzy travel card a few years ago, with hopes of funding a dream vacation every summer with all the points or miles you earned between Labor Day and Memorial Day.

But if your travel plans never panned out, you may be using your premium card for everyday spending and settling for periodic statement credits. Chances are you’re not getting much bang for your buck – points redeemed for purchases can be worth as little as 0.6 cents per point in some cases. That’s especially true if your rewards card has a high annual fee.

You can be forgiven if you don’t know the true monetary value of all the rewards you earn and redeem. Aside from straightforward cash back percentages, rewards valuations can be complicated, and they change frequently.

“I think people get confused by it all,” said Suzanne Wolko, a travel and rewards expert based in Philadelphia. “To have to map it out, figure out a strategy and do the research, it becomes too cumbersome. They usually take the path of least resistance, and they might find a cash back card, but then realize down the road they can’t really use it for travel.”

Decker recommends keeping a card that offers cash back on all of your spending to complement other high-rewards cards you might own.

“I think everyone should try to have at least one card where you get more than one cent per dollar spent on everything,” he said. “A lot of cards offer better returns day-to-day with no annual fee. When you pair them with a premium card, then you can pretty much cover every category.”

But even some elite cards are expanding their offerings to cover more than just travel spending. Decker noted the recent changes to the American Express® Gold Card, which now offers 4X points at restaurants worldwide and U.S. supermarkets (up to $25,000 in purchases per year for the latter). The previous iteration of the card only offered 2X points for those categories. The card still offers 3X points for travel, depending on how you book it, and 1X points for all other purchases.

See related: Why food is the hottest thing in credit card rewards

“I think everyone should try to have at least one card where you get more than one cent per dollar spent on everything.”

How to match your rewards strategy with your lifestyle

Identify your rewards goals: Are you planning to fund a vacation with points or miles, or just trim your monthly expenses with cash back? If it’s the former, you might want to consider a travel card with a big sign-up bonus. For the latter, you might be better served with a card that offers extra cash back for gas and groceries, or one that offers more than 1 percent cash back on all purchases.

Review your spending: Where does most of your money go? The budget of a family with children may skew heavily toward grocery shopping and fueling multiple cars, while a young married couple or single person may spend on dining out and travel more frequently.

Decide how many cards you want: Few of us spend all of our cash on a single category like groceries, gas, travel or dining and nothing else. For the best rewards-earning results, mix up your spending with a few cards – ideally ones that specialize in different rewards categories. Just be careful about applying for too many cards at once – it can temporarily lower your credit score via hard inquiries and by lowering the average age of your accounts.

Rewards card rule No. 1: Don’t carry a balance

No matter how many rewards cards you sign up for, it’s critical to avoid carrying a balance, unless your card is in an introductory no-interest period and you have a plan to pay it off before it ends. The average median APR for credit cards is currently above 20 percent, according to the CreditCards.com Weekly Credit Card Rate Report.

“You must pay your bill in full every time, otherwise any rewards you earn will end up costing you,” said Ted Rossman, senior industry analyst at CreditCards.com.

See related: How not to pick the wrong credit card

Methodology

The study was conducted online in Ipsos’ Omnibus using the web-enabled “KnowledgePanel,” a probability-based panel designed to be representative of the U.S. population, not just the online population. The sample consists of 1,055 nationally representative interviews with adults aged 18 and over, conducted between Nov. 20-25, 2018. The margin of error is plus or minus 3 percentage points.

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Credit Card Rate Report Updated: September 11th, 2019
Business
15.45%
Airline
17.38%
Cash Back
17.53%
Reward
17.40%
Student
17.58%

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