Using a cash back credit card can be a great way to save money on groceries, as long as you avoid interest charges by paying your balance in full each month.
You can earn up to 6% cash back on grocery purchases if you have the right card and use it at the right store. So using a credit card at the checkout register can really pad your pocketbook.
But are you actually getting what you think you’re getting from your cash back credit card?
You may have a card that promises bonus rewards on grocery purchases, but there are card-specific restrictions that could keep you from earning rewards on all the groceries you buy. Team Clark will help you find out where most major card issuers stand.
Think You’re Earning Bonus Cash Back on Groceries? Some Stores Are Excluded
As you might suspect, there is a major catch when it comes to earning cash back bonuses on grocery purchases: Each card issuer has a different definition of what counts as “groceries,” and your favorite places to shop might be excluded.
“Each card issuer has exclusions and limitations on the type of cash back you get. It’s in the mice type, which is completely different from the colorful brochure you get from them,” money expert Clark Howard warns.
For example, card issuers sometimes classify stores like Walmart, Target and Costco as “superstores” or “wholesale clubs” rather than as grocery stores. That can be a roadblock if you’re trying to claim bonus rewards on groceries you buy at those kinds of stores.
The only way to know for sure where your favorite store stands is to check your credit card’s fine print.
Team Clark has researched the policies on grocery rewards for some of the major credit card issuers:
American Express offers many cards that include bonuses at select U.S. supermarkets, including the Blue Cash Preferred® card from American Express. It offers an amazing 6% cash back on up to $6,000 per year in purchases (1% back after that). But you’ll earn this bonus only at U.S. supermarkets like Kroger, Publix, Safeway, Sprouts and Trader Joe’s.
American Express lays out its definition for “U.S. Supermarkets” here. It even lists which stores it excludes — some of them by name. And that list includes Target, Walmart and Amazon.
These terms exclude all stores outside of the United States as well as superstores and warehouse clubs like Sam’s Club and BJ’s. Costco accepts only Visa, so your American Express card won’t work there anyway.
Bank of America
Bank of America is unique in that it specifically includes wholesale stores under its definition of supermarkets for its Cash Rewards credit card.
The card offers “2% cash back at grocery stores and wholesale clubs.”
But depending on your spending habits, it might be a financial wash: Bank of America excludes grocery stores and wholesale clubs from its highly marketed “choose your own category” rewards. Those rewards earn you 3%.
If you dig into the fine print on the Barclaycard Rewards Program, it addresses how it classifies purchases for rewards eligibility:
“Purchases must be submitted by merchants using the merchant category codes for purchases in these categories to qualify for the additional points. Barclaycard is not responsible for incorrectly coded purchases.”
The JetBlue and JetBlue Plus cards offer bonuses on supermarket purchases from places categorized as grocery stores and supermarkets. But the fine print states that “superstores, warehouse clubs and discount stores” such as Target, Walmart and Costco are not eligible.
The SavorOne Rewards from Capital One card offers 3% Cash Back at supermarkets, and the website says that includes “meat lockers, freezers, dairy product stores and specialty markets.” But it excludes “superstores like Walmart and Target.”
Chase doesn’t offer many cards that give you a year-round bonus on supermarkets, but its popular Freedom Flex card offers 5% cash back on grocery store purchases up to $12,000 purchased in the first year. The offer excludes Target, Walmart, discount stores and warehouse clubs.
Citi doesn’t offer any cards that feature bonuses on grocery purchases. It does, however, offer a Costco-branded card that gives 2% back to the wholesale club’s members on groceries and many other items.
The Discover it® card is another card that changes cash back offers by quarter. If you hit it at the right time of the year, you can get 5% cash back on groceries (with a $1,500 spending cap per quarter). In addition to traditional grocery stores, the card includes groceries you buy at Walgreens or CVS. But it excludes purchases at convenience stores, gas stations, warehouse clubs, discount stores and supercenters.
U.S. Bank has some cards that can earn a bonus at grocery stores, but it specifies that “Purchases at discount/retail stores that sell groceries may not qualify for the grocery store category.” So don’t count on getting this bonus at Walmart, Target or any superstores or wholesale clubs.
What Can You Do if You Aren’t Sure?
No card issuer offers a guarantee that a particular store will qualify for a grocery store bonus, but you can be pretty sure that a store will qualify if it’s part of a national chain of traditional supermarkets.
Credit card issuers rely on something called merchant category codes (MCCs) to classify vendors. Visa has an online tool where you can look up a particular merchant’s category code. You can also find more information about these codes by reading this online guide from Citi.
The only way to be absolutely sure whether your favorite store will qualify for the bonus from your credit card is to shop there: Make a small purchase, then wait for your statement and see if the transaction earned a bonus.
Some credit card issuers will indicate on your statement which purchases qualified for bonuses, but with others, you might have to call and ask.
An Alternative to Grocery Rewards Cards
If you’re having trouble getting cash back bonuses on your groceries, you may want to change the type of credit card you use.
There are everyday cash back cards that offer as much as unlimited 2.5% cash back on any purchase you make. That takes the guesswork out of the equation.
For example, the Alliant Visa Signature Card offers 2.5% cash back on all purchases. However, it does carry a $99 annual fee and requires a credit union membership. (Note: the first year of membership is fee-free.)
If you’re trying to avoid annual fees, Clark recommends the Citi Double Cash as a top everyday cash back card. It pays an unlimited 2% back on all purchases (1% when you buy, 1% when you pay your bill) and has no annual fee.
Do you have an interesting grocery-related cash back credit card experience? We’d love to hear about it in the comments below!