5 Things to Know About the Kroger Credit Card

Rewards aren’t competitive and points redemption is restrictive. Even Kroger loyalists might be better off with a general cash-back card. 

Funto OmojolaOctober 16, 2020
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5 Things to Know About the Kroger Credit Card

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Kroger is one of the largest grocery store chains in the U.S., with over 2,700 stores across 35 states. If you're a dedicated shopper at one of the many stores in the Kroger "family," you might be considering the Kroger 1-2-3 REWARDS® World Mastercard® for your frequent grocery runs.

But even for Kroger loyalists, this card isn't competitive, thanks to its mediocre, inflexible rewards and clunky redemption process. Most shoppers would be better off investigating general cash-back credit cards, any number of which would be more versatile and lucrative.

Here are five things to know about the Kroger credit card:

Nerd tip: Stores in the Kroger Co. family include Kroger, but also Ralphs, Harris Teeter, King Soopers, Baker's, Dillons, Smith’s Food and Drug, Fred Meyer, and Gerbes, among others.

1. Rewards are mediocre and limited

The Kroger 1-2-3 REWARDS® World Mastercard®, issued by U.S. Bank, earns the following rewards:

  • 3 points per $1 spent on certain Kroger "own-brand" products.

  • 2 points per $1 spent at any Kroger-owned store (not including Kroger fuel centers).

  • 1 point per $1 on all other spending.

  • Discounts on eligible gas purchases.

Every 1,000 points you earn equals $5 in free groceries at Kroger stores, which means a point is worth half a cent each. That's well below the industry standard of a full penny per point, and it means that even at the card's highest 3x rewards rate, you're getting just 1.5% back that you can use toward purchases at Kroger stores. There are plenty of cash-back credit cards that earn 1.5% back or higher on all spending.

And about that 3x tier: It's reserved only for eligible store-brand products (Kroger, Simple Truth, Home Chef and Pet Pride, among others). If you don't like Kroger's private-label goods and instead reach for the Heinz, Hunt's or Hellmann's, then you'll have to settle for lower rewards.

Many cash-back cards offer better rewards and are far less restrictive in terms of where and how you can earn them. Consider the $0-annual-fee Chase Freedom Unlimited®. It offers new cardholders 5% cash back at grocery stores (not just Kroger stores) for the first year, on up to $12,000 in spending. After that, you drop back to 1.5% back at grocery stores — but in terms of point value, that equals or exceeds what the Kroger card can offer even in its highest tiers. And that's not taking into account the multiple other bonus categories featured on the Freedom Unlimited. Plus, you can spend your cash back however you like, not just with a single brand.

2. Redemption is cumbersome and restrictive

Speaking of which, points earned via the Kroger 1-2-3 REWARDS® World Mastercard® cannot be redeemed for cash back. Rather, they accrue toward "rewards certificates" that can be used only within the Kroger family of stores.

Aside from a lack of rewards flexibility, there are other hurdles:

  • You can't "bank" points: For every 1,000 points that you accumulate, you’ll automatically receive a $5 rewards certificate to be used at a store under the Kroger umbrella. That means you cannot save up a big stash of points to use later, and it also means that if you have only 999 points, they're no good to you yet.

  • You'll have to wait: Rewards certificates are issued only four times each year and are mailed to cardholders in February, May, August and November. Any remaining points you have that fall short of earning a $5 certificate will be rolled over to the next redemption period.

  • You're on the clock: Points expire after three years, and rewards certificates are on an even shorter timetable: They must be used within one year of the date they’re issued. (They also can't be redeemed at Kroger fuel centers).

While some of these restrictions come with the territory for store-branded credit cards, this is not how most general rewards credit cards work. You can find many with no minimum required redemptions, no expiration date on rewards, and no need to wait by the mailbox every few months for a certificate that's usable only in certain stores.

Take the $0-annual-fee Blue Cash Everyday® Card from American Express. It earns 3% cash back at U.S. supermarkets — not just Kroger stores — on up to $6,000 spent per year (then 1% back). That $6,000 spending cap is well above what the average U.S. household spends on groceries. And, again, you're earning cash back, not points.

3. There's a separate fuel rewards program

If you get the Kroger 1-2-3 REWARDS® World Mastercard®, you'll automatically be enrolled in Kroger's shopper-loyalty program. (Credit card or not, membership is free and you can enroll online or in a Kroger-owned store).

As a member of the program, you'll earn 1 "fuel point" for every $1 you spend on groceries — with some exceptions — at any store in the Kroger network. Here's how the program works:

  • Fuel points can be redeemed at Kroger fuel centers and participating Shell gas stations. At Kroger fuel centers, you can redeem up to 1,000 fuel points for $1 off per gallon. (You can redeem in 100-point increments, up to 35 gallons.) At eligible Shell stations, you can redeem 100 fuel points for 10 cents off per gallon.

  • There’s no limit to how many fuel points you can earn each month. But these points don't carry over and instead expire the last day of the month after they are earned.

Fuel points aside, if you have the Kroger credit card, you can also earn an ongoing 5-cent-per-gallon discount at eligible Kroger fuel centers. But in terms of credit card points on those fuel purchases, you'll still be rewarded at the card's baseline rate (1 point per $1 spent). And the rewards certificates you earn with the card can't be redeemed at Kroger fuel centers.

Nerd tip: Not all Kroger grocery store locations in the U.S. have fuel centers where you can pump gas and redeem fuel points. Kroger's fuel locator can help you find which fuel centers are closest to you.

4. There's a two-part sign-up bonus

The Kroger 1-2-3 REWARDS® World Mastercard® features the following welcome offers:

  • Through Jan. 15, 2021, the card is offering 5% cash back in statement credit, on up to $2,500 in purchases, within the first three months of account opening. If you were to max that out, you'd earn $125. That's not bad, but many cash-back credit cards offer bonuses of $150 or more for a lot less spending.

  • New applicants will also get 25 cents off per gallon of gas, up to 35 gallons per fill-up, during the first year of using the card. To receive the discount, you’ll have to redeem at least 100 fuel points, when you scan your card, at eligible Kroger fuel centers. (The discount drops down to 5 cents per gallon after the first year.) If you drive a lot, this can add up to fairly big savings on gas, although keeping track of and redeeming fuel points can be high-maintenance.

Nerd tip: The 25-cent-per-gallon discount offer is not available in Louisiana or Missouri.

5. Try to avoid carrying a balance

The APR for purchases made with the Kroger 1-2-3 REWARDS® World Mastercard® can range as high as 23.99%, which is a good bit higher than the average APR charged for cards that incur interest.

Carrying a balance with this card would eat away at any rewards or discounts you'd earn.

Information about the Kroger 1-2-3 REWARDS® World Mastercard® has been collected by NerdWallet and has not been provided or reviewed by the issuer of these cards.

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