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.

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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. Both cards came from American Express:

• Blue Cash Preferred^® Card from American Express: Earn 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%). There’s a $0 intro annual fee for the first year, then $95.
• Hilton Honors American Express Surpass® Card: Earn 6X Hilton Honors Bonus Points for each dollar of eligible purchases on your card at U.S. supermarkets. There’s a $150 annual fee.

One other card — the U.S. Bank Shopper Cash Rewards™ Visa Signature® Credit Card — offers 6% cash back on your first $1,500 in combined eligible purchases each quarter with two retailers you choose, 3% cash back on your first $1,500 in eligible purchases on your choice of one everyday category (like wholesale clubs, gas and EV charging stations, bills and utilities), 1.5% cash back on all other eligible purchases.

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. The U.S. Bank Shopper Cash Rewards™ Visa Signature® Credit Card also has an annual fee of $0 for 12 months, then $95.

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 — the maximum spending allowed on the Blue Cash Preferred^® Card from American Express — 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.

For example:

• The terms and conditions of the Blue Cash Preferred^® Card from American Express say, “Superstores, convenience stores, warehouse clubs and meal-kit delivery services are not considered supermarkets.”
• The terms and conditions of the Hilton Honors American Express Surpass® Card say, “You will receive 3 additional Hilton Honors Bonus Points, for a total of 6, for each dollar of eligible purchases at the following categories of merchants excluding superstores and warehouse clubs: Restaurants located in the U.S., supermarkets located in the U.S. and on gasoline at gas stations located in the U.S.”
• Discover listed grocery store spending as one of its featured bonus categories for several of its rewards cards in the first quarter of 2023, but it set the following restrictions: “Grocery store purchases include those made at supermarkets, meat lockers, bakeries, smaller grocery stores and grocery delivery services. All purchases made at Walmart, Target, convenience stores, wholesale clubs, discount stores and supercenters are not eligible.” (You have to activate to earn the 5% cash back bonus in the quarterly rotating categories. After the quarterly maximum of $1,500 in spending, you earn 1% cash back in the category.)
• The Capital One Savor Cash Rewards Credit Card offers, among other things, unlimited 3% cash back at grocery stores. However, on its website under “What counts as a grocery store?” is the following: “A supermarket, meat locker, freezer, dairy product store and specialty market. Excludes superstores like Walmart and Target.”

The emphasis above is mine. By saying that superstores, warehouse clubs, wholesale clubs or discount stores are excluded from potential rewards bonus earnings, these 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.

For example:

• The H-E-B Visa Signature® Credit Card lets you earn 5% cash back on qualifying H-E-B brands and Favor deliveries and 1.5% cash back on other purchases.
• The Capital One Walmart Rewards® Card gives you 5% cash back at Walmart.com, including pickup and delivery. 2% back at Walmart stores, at restaurants and on travel. 1% back everywhere else Mastercard® is accepted.
• Credit cards from the Kroger brand let you earn 5% cash back on eligible net mobile wallet purchases for the first $3,000 spent in a calendar year, then 1% after (though not through Kroger Pay, oddly enough).
• The Chase Sapphire Preferred^® Card gives 3x points on online grocery purchases — but if you make them in-store, it won’t count.

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 example, someone who does a lot of grocery shopping at Target can get 5% off at Target in-store and online with the Target REDcard™ Credit Card. Meanwhile, shoppers with the H-E-B Visa Signature® Credit Card can get 5% cash back on qualifying H-E-B brands and Favor deliveries and 1.5% cash back on other purchases. Those savings can be significant. Those savings can be significant.

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.

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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.