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Credit Card Bonus Categories Might Not Translate Overseas

March 25, 2015
Airline Credit Cards, Credit Card Basics, Credit Cards, Rewards Credit Cards, Travel Credit Cards
Your Credit Card Bonus Categories Might Not Translate Overseas
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So you took your travel credit card abroad, made bonus-eligible purchases, like hotel stays and train tickets, and now you’re wondering why you didn’t get extra rewards. You won’t always earn bonus rewards abroad, but there are a few cards that offer solid rewards for purchases made outside the U.S.

How bonus categories work

Let’s say your credit card gives 2 points per $1 spent on travel and 1 point per $1 spent elsewhere. If you book a night at the Marriott for $100, you’ll get 200 points. But who decides that Marriott is a hotel? For that matter, who decides that hotels count as travel?

When a merchant starts accepting Visa or MasterCard, it’s assigned a merchant categorization code (MCC), which tells you whether the business classifies itself as a department store, hotel, travel agency or any other category. MCCs are used by payment companies to calculate interchange fees, by the IRS to set reporting standards, and — most important for our purposes — by banks to determine reward eligibility.

A credit card’s issuing bank will group certain MCCs together to form a rewards category — for example, airlines, car rental agencies and online travel agents might fall under travel — and give bonus rewards through any merchant with a matching MCC.

MCCs are sometimes counterintuitive. Uber, for example, isn’t a taxi — it’s a “ground transportation service.” Costco is listed as a “wholesale store” rather than a department store.

So why didn’t you earn those extra rewards when you spent on a bonus category? Though MCCs are used worldwide, it’s not impossible for international merchants to be categorized differently.

To avoid surprises, try booking through a U.S.-based agency like Hotels.com or Orbitz, and find their merchant categorization codes using Visa’s lookup tool.

» MORE: 7 Ways your credit card could save you money on holiday travel


Image via iStock.