Advertiser Disclosure

Credit Card Bonus Categories Might Not Translate Overseas

Airline Credit Cards, Credit Card Basics, Credit Cards, Rewards Credit Cards, Travel Credit Cards
With so many websites offering free financial tools, it can be hard to know whom to trust. At NerdWallet, we spend literally 1,000s of hours researching partner offers and following strict editorial integrity to match you with the perfect choice. We even share how we make money so you can enjoy our expert advice and researched recommendations with total clarity and confidence.
Your Credit Card Bonus Categories Might Not Translate Overseas

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

Cards that earn great value internationally

The simplest way to earn rewards without the hassle is to get a card that has a high base rewards rate and no foreign transaction fee, which will save you a bundle when you go abroad. Here are a couple of the Nerds’ favorites:

The Barclaycard Arrival Plus® World Elite Mastercard® offers an 2 miles on every $1 spent at home or overseas, and you can redeem your miles against any travel expense, including airline flights and hotel stays. It has an annual fee of $0 for the first year, then $89, and comes with a solid signup bonus: Enjoy 40,000 bonus miles after you spend $3,000 on purchases in the first 90 days — that's enough to redeem for a $400 travel statement credit toward an eligible travel purchase.

If you’re looking for a $0 annual fee, no-fuss card, check out the Capital One® Quicksilver® Cash Rewards Credit Card. It offers 1.5% cash back on all purchases and, like all Capital One cards, has no foreign transaction fee. Finally, you can earn a signup bonus: One-time $150 cash bonus after you spend $500 on purchases within 3 months from account opening.


Image via iStock.