Grocery Rewards Credit Cards Can Earn Shoppers Hundreds, but the Fine Print Means Many Americans Will Miss Out

Alongside travel, gas and dining, grocery rewards are a pillar of the credit card space. Dozens of card issuers big and small offer Americans the ability to earn points or cash back for putting food on the table.

A new LendingTree report finds that those cards can be lucrative, potentially earning a family that spends around $100 a week on groceries more than $300 in cash back in a year. However, a dive into the fine print shows that many Americans won’t be able to earn nearly that much because their grocery purchases aren’t eligible for rewards — even though they’re made at some of the most popular grocery sellers in the country.

Here’s what you need to know to get the biggest rewards bang for your grocery buck.

Key findings

• The right credit card can earn households more than $300 a year, on average, in grocery rewards. American households spend an average of $5,259 a year on groceries, according to the U.S. Bureau of Labor Statistics, and the highest cash back earnings rate we found for grocery spending is 6%. That adds up to $315.54 a year in potential rewards for grocery spending.
• But buying groceries at Walmart, Costco, Sam’s Club and Target often won’t help you rack up rewards. The rules can differ by issuer or individual credit card, but money spent on groceries at so-called superstores, big-box retailers or warehouse clubs often won’t earn extra rewards. Given that those retailers are among the biggest grocery sellers in the nation, some of the grocery rewards cards with the highest earning potential won’t be as lucrative as they might seem for many Americans.
• Even what and how you buy at a grocery store can impact your rewards. Did you buy the store brand? Did you pay with a mobile wallet? Did you order online? Are you buying a gift card? These are a few things that, depending on the issuer and card, can significantly impact your earnings potential.
• Annual fees aren’t common among grocery rewards credit cards. Just 20 of the 91 grocery rewards cards we reviewed came with an annual fee, and four of those waived it for the first year.

The right card can earn you hundreds in grocery rewards

LendingTree found 91 credit cards that offered rewards for grocery shopping.

We found a wide range of options, with the biggest earnings rate topping out at 6% cash back or 6x points.

Two of the largest U.S. grocers by market share — Walmart and Target — are among the retailers that cardholders can select for 6% cash back. However, you must enroll each quarter into two retailers and one purchase category.

American households spend an average of $5,259 a year (roughly $100 a week) on groceries, so a 6% return on that spending is significant:

• 6% of $5,259 is $315.54
• Ramp up to $6,000 and that cash back* figure climbs to $360 a year

Looking at points instead of cash back:

• 6x points on $5,259 is 31,554 points
• 6x points on $6,000 is 36,000 points

ValuePenguin estimates that Hilton Honors points are generally worth a half-cent each. This makes the aforementioned 36,000 points worth $180, though that can fluctuate depending on location, timing and several other factors.

Whether you’re talking cash back or points, these returns are significant — especially considering they’re typically one part of the card’s potential earnings. However, our review found fine print that could significantly limit that potential.

The most important thing to consider when looking for a new grocery rewards card

When it comes to earning rewards, not all grocery spending is created equal. Most — if not virtually all — grocery rewards cards limit what purchases will earn rewards. We’ll talk about other restrictions later in the report, but the most important earnings caveat people need to know is that where you buy your groceries matters — a lot.

By saying that superstores, warehouse clubs, wholesale clubs or discount stores are excluded from potential rewards bonus earnings, issuers are typically saying grocery purchases at places like Walmart, Costco, Sam’s Club and Target won’t earn you any extra rewards. That’s a big deal, especially considering that Chain Store Guide (via Axios) lists those four stores among the six biggest grocery sellers in the U.S. — making up 40.5% of the grocery marketplace, with Walmart accounting for 25.2% alone.

This code structure has many uses, but what matters for this report is that credit card issuers tend to use these codes to determine which purchases earn what rewards. It’s how card issuers make sure that when you buy a loaf of bread at Kroger, you get grocery rewards, or when you get that Double-Double at In-N-Out Burger, you get dining rewards. Simple, right? In theory, yes. In reality, not so much.

The problem for card issuers is that, obviously, the biggest retailers in America don’t sell one item type — and that’s certainly true with groceries. At Walmart, you can buy a gallon of milk and a lawn mower. At Target, you can buy hamburger buns and a new dress or pair of shoes. At Costco, you can buy fresh salmon and a new TV.

What happens is that countless purchases get misattributed every day, and the rewards world keeps turning. That’s because it happens so often that it sort of ends up as a wash, at least in theory. However, it can be frustrating if you’re trying to get the most bang for your rewards buck and extend your budget a bit. It can be especially confusing when you consider that, for example, a Walmart Supercenter reportedly may have a different MCC than a standard Walmart. In addition, a large business may have multiple MCCs under one roof, such as a grocery store with a pharmacy. Plus, some businesses aren’t even labeled as you’d expect because, for example, their primary product or service has changed over the years.

And, of course, merchant codes aren’t always to blame for the exclusions. Card issuers can go beyond those codes and explicitly exclude various companies by name, which we saw multiple times with Walmart and Target. Excluding some of the biggest grocery sellers means banks have to pay out fewer grocery rewards overall. (And if they irritate a few potential cardholders, it’s probably OK with them.)

Even what and how you buy at a grocery store can impact your rewards

Sometimes it still isn’t enough to know that you’re shopping in the right place to potentially earn rewards. Sometimes it’s about what you buy — and how you buy it.

Further, alcohol, tobacco and e-cigarettes, gift cards and prescriptions are among the types of purchases that often won’t earn you any rewards at all.

Consider grocery rewards cards, but explore your options

There’s no such thing as a one-size-fits-all answer for the best card of any type, and that’s certainly the case for those with grocery rewards. Ultimately, the best fit for you depends heavily on where you shop, how much you spend there, what you want from the card and other factors you can only answer about yourself.

As with travel cards, if you’re hyper-loyal to a grocery shopping brand (and many of us are), opting for their store credit card can be the best way to maximize your reward earnings.

For others — those who just want a good earnings rate on whatever they buy wherever they buy it — a simple 2%-on-everything cash back card might be the best choice.

Ultimately, if you don’t read the fine print before applying for a grocery rewards card, you may end up disappointed — especially if you do most of your shopping at Walmart, Target or a warehouse club. However, if you’re willing to shop around and carefully seek out the card that best fits your spending habits, you can put a little extra money back in your pocket.

Methodology

LendingTree reviewed more than 200 cards from more than 50 issuers, including banks and credit unions, to find those offering extra rewards for grocery spending. We reviewed basic terms and conditions, including APRs and annual fees, and evaluated the cards’ rewards programs. All offers were reviewed online on financial institutions’ public websites. Credit card offer data is accurate as of June 28, 2023.