Are all grocery purchases eligible for Grocery Cash Back?
Credit card rewards can be a benefit of owning a card and using it responsibly. They can be in the form of airline miles and hotel points or cash rewards that give you back a percentage of your purchases as cash. For example, the Blue Cash Preferred® card from American Express offers 6% cash back on purchases at US supermarkets (up to $6,000 per year, then 1%).
Reader Ruben writes that his Discover credit card offers 5% cash back on grocery purchases, and he wonders what purchases qualify. Select Discover cards to earn 5% cash back: You earn 5% cash back on rotating categories each quarter on up to $1,500 in combined spend per quarter, then 1% (activation required).
“I just have a general question about cash back resulting from the grocery category,” he says. “When they say groceries, do they mean strictly food related items or can other items sold (eg at Ralphs) also qualify for cash back? I especially want to know about the 5% cash back on my current Discover credit card. Do I get the 5% on all grocery purchases, or are certain items considered 1% cash back? »
Check merchant category code for retailer
Card issuers assign different categories (or merchant category codes) based on the type of business the merchant is in. These codes determine which retailers are eligible for a specific rewards category.
These categories could include restaurants, grocery stores, gas stations, department stores, home improvement stores, and office supply stores. Some merchants may not be eligible for Cash Back in a certain category, even if you think they are. For example, explains Chase, “the primary business of restaurant category merchants is in-store or on-premises catering, including fast-food restaurants and fine-dining establishments.”
This means that if you make purchases from merchants selling food and beverages that operate in sports stadiums, casinos, theme parks, grocery stores, hotels and department stores, those purchases will not be eligible for earn you cashback in the default restaurant category. Only if the merchant has configured these purchases to be categorized as restaurant will you earn Cash Back in the restaurant category.
Grocery Cash Back Rewards
Similarly, Chase includes in its grocery category “supermarkets, merchants that offer a full line of groceries, including a deli and bakery as well as smaller grocery stores.”
The issuer does not count warehouse stores and discount stores that sell a wide range of products, including groceries, in this category. Pharmacies and merchants who only sell a few grocery items are also not eligible for Grocery Cash Back. And if you shop at a gas station, that doesn’t count toward Grocery Cash Back, either.
And according to Discover: “Grocery purchases include those made at supermarkets, meat lockers, bakeries, small grocery stores and grocery delivery services. All purchases made at Walmart, Target, convenience stores, wholesale clubs, discount stores and supercenters are not eligible.
Ruben, what you need to know is whether Discover classifies a store you’re interested in as a grocery store. Then the purchases you make at that store would qualify for Grocery Cash Back. The rewards would apply to other purchases in addition to groceries.
That doesn’t mean you should stock up on all kinds of purchases at your favorite grocery store just to qualify for Grocery Cash Back. Other stores specializing in hardware items, for example, may offer a better price for these items than your local grocery store. If you bought hardware items at a grocery store, you might pay a higher price, even after taking into account the cash back earned.
The bottom line
Card issuers classify retailers into different merchant category codes based on the type of business. This determines whether you will get rewards in a specific category for your purchases at a certain store.
In general, if a store is categorized as grocery and you have a credit card that rewards groceries, you’ll get grocery category rewards for purchases in addition to groceries made at that store. Ruben, you should check with your issuer to see if the store you prefer is eligible for Grocery Cash Back.
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