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Grocery shopping is a popular — and potentially lucrative — rewards category. But it can be a little tricky to optimize, depending on where you shop.
Here are some tips to help you get the most out of your trips to the supermarket.
Know what does and doesn't qualify
You’ll generally be eligible for bonus cash back if the merchant category code, or MCC, is labeled as a grocery store. But just because a store sells groceries doesn’t mean it qualifies. If you normally buy groceries at Walmart or Target, you typically won’t earn any elevated rewards on a credit card with grocery rewards because issuers often make exceptions for such big-box stores. The same generally goes for warehouse clubs like Costco, Sam’s Club and BJs.
If you purchase groceries through a delivery app like Instacart, many issuers will still offer elevated rewards. But anytime you buy something through a third-party platform, reward earnings can get a little bit iffy. So make sure you know what does and doesn’t count as a grocery purchase on your specific card.
Pick the right card for your spending
The Blue Cash Preferred® Card from American Express is a gold standard of the grocery rewards game. The annual fee is steep for a cash-back card (It has a $0 intro annual fee for the first year, then $95.), but in exchange, you'll earn an industry-leading 6% cash back at U.S. supermarkets, up to $6,000 in spending a year (1% back in that category after that). Terms apply, see rates and fees.
Even better? You'll only need to spend a little more than half of that to make the annual fee worth it.
As long as you spend about $3,200 on groceries each year or more (roughly $267 a month), you’ll fare better with the Blue Cash Preferred® Card from American Express than the average no-annual-fee alternative. But if you won’t spend enough money at a U.S. supermarket to make the Blue Cash Preferred® Card from American Express worth it, or if you purchase groceries somewhere other than a supermarket, here are other cards to consider:
Grocery shoppers who don't want to pay a fee
If you frequently shop at supermarkets but you're dead-set against paying an annual fee, you still have good options.
For example, take a look at AmEx's less-expensive sibling of the Preferred card, known as the Blue Cash Everyday® Card from American Express. This $0-annual-fee card earns 3% back at U.S. supermarkets on up to $6,000 spent per year (then 1%).
You'll also earn 3% cash back on U.S. online retail purchases on up to $6,000 in spending per year, 3% cash back on U.S. gas stations on up to $6,000 in spending per year, and 1% cash back on everything else. Terms apply, see rates and fees.
Another good option would be the $0-annual-fee Capital One SavorOne Cash Rewards Credit Card, which earns an unlimited 3% cash back on spending at grocery stores.
On top of that, the card also earns 3% back on dining, select streaming services and entertainment (1% back on other purchases). So it could be a good choice regardless of whether you cook most of your meals at home or you prefer dining out.
If you grocery shop at Target, the Target REDcard™ Credit Card will give you a 5% discount on every store purchase.
It has an annual fee of $0, but you won’t be able to use this card anywhere besides Target, since it’s a closed-loop credit card.
So it’s not going to be an ideal choice for shoppers wanting an all-purpose card.
Warehouse club members
Even though you can certainly buy groceries from warehouse clubs, they generally aren't considered "grocery stores," meaning purchases made there wouldn't qualify for bonus rewards on many cards.
But the most popular warehouse clubs offer their own store-branded cards, and those can earn you elevated rewards.
Customers who want more flexibility might instead opt for the Bank of America® Customized Cash Rewards credit card, which earns 3% back on a category of your choice (from a list of several options) and 2% back on grocery stores and wholesale clubs for the first $2,500 of combined bonus category/ grocery store/wholesale club spending per quarter.
(After hitting that cap, you earn 1% back on those purchases.)
How to optimize your spending
Grocery shopping can be a lucrative rewards category because of the sheer amount of items you can purchase at a supermarket. Making an effort to buy more than food can help you earn even more.
Switch your pharmacy. If your grocery store has a pharmacy, consider having your prescriptions sent there instead of to a drugstore. You’ll be able to earn elevated rewards and save time by picking them up on your weekly grocery store run. Win, win.
Buy nonfood items. If you usually go to big-box stores for toiletries, cleaning supplies, magazines or other household items, consider switching those purchases to your grocery store — although you may want to check the price first to make sure you’re actually saving money. Even with an elevated cash-back rate, it might still be better for your wallet to shop at a big-box retailer.
Buy gift cards. Most supermarkets have racks of third-party gift cards for other retailers and restaurants. If you buy one, it’ll be rung up as a grocery purchase. As long as you purchase gift cards to places you already frequent, you'll maximize your rewards without spending any extra money.