How to maximize your credit card rewards when shopping for groceries

People wearing face masks are seen shopping at a supermarket in Foster City, California, on April 22, 2020.
Xinhua News Agency | Getty Images

During the coronavirus pandemic, consumers are stocking up on food  — and increasingly, they're using credit cards to make grocery purchases. As of April 2020, 46% of in-person grocery shoppers paid with a credit card, 39% with a debit card, and 15% with cash, according to a recent Bankrate survey.

"That suggests to me that a lot of people don't have the available funds to pay right now, so they're financing these purchases with credit," said Ted Rossman, industry analyst at Bankrate

Americans spend $4,464 on food consumed at home each year, according to the 2018 Consumer Expenditure Survey from the Bureau of Economic Analysis. And with so many Americans staying at home this spring, and higher prices on staples like eggs and meat, they're spending even more in 2020 so far. Total grocery sales spiked an initial 79% from March 11 to March 18, according to data from Earnest Research.

Some credit cards issuers are taking note of this shift and adapting rewards cards benefits to align with spending habits during the coronavirus pandemic as people buy more groceries and travel less.  

If you're already using a credit card to pay for groceries, you can take advantage of some of these updated perks. Here's what you need to know about rewards cards. 

Before swiping, do your research

Most cash-back cards offer a base reward of 1%-2% cash back, but some cards offer bonuses as high as 6% back in particular categories. Experts say cash-back cards can be valuable when those bonuses reward your spending priorities and frequent purchases, such as grocery spending.

For grocery shopping, consider a card that offers a bonus in that category. When you're using a card that offers an additional 4% or 5% cash back in the categories where you make frequent purchases, you can more easily boost your rewards. 

Check to see if you already have a credit card that prioritizes grocery spending, Rossman suggests. For example, the American Express Blue Cash Preferred offers 6% cash back throughout the year at U.S. supermarkets on up to $6,000 per year in purchases, and the Chase Freedom card offers 5% cash back on groceries, excluding Walmart and Target purchases, during the April-June quarter.

A woman shops at a Fairway supermarket amid the coronavirus pandemic in New York, New York, on May 1, 2020.
Alexi Rosenfeld | Getty Images

You might also see if you have one that has shifted its rewards in the wake of the pandemic.

"From a rewards perspective, there has been a surge in the number of cards offering high-end rewards at the grocery store. Co-branded hotel cards from Delta, United, Marriott, Hilton, and Hyatt have all upped their grocery rewards," says Rossman. "These cards are trying to stay top of mind, generate some revenue, and build consumer loyalty by enabling people to earn points that they can use for future travel."

For example, the Chase Sapphire Reserved and Preferred cards, which usually allow customers to earn points that can be used toward rewards, is now offering enhanced rewards on grocery spending for a brief period. You can earn 5X points and 3X points, respectively, per dollar spent on grocery purchases on up to a maximum of $1,500 in eligible purchases from May 1 through June 30, 2020.

Pay off your card in full each month

To get the most from your rewards card, you want to make sure you're not canceling out your savings with high interest payments. 

"They key to being successful with a credit card that offers cash back is to always pay your bill in full, on time," Julian Mark Kheel, director and senior analyst at travel site The Points Guy told Grow last year. "If you even pay one month worth of interest, you've completely wiped out any gains you made in earning cash back."

How to successfully use a cash-back credit card

Video by Mariam Abdallah

With so many Americans experiencing economic hardship, some issuers are giving cardholders who can't pay their bills a break right now. Even if you do have to carry a balance in the short-term, asking for relief can help you avoid damage to your credit score.

"Issuers are offering things like removing minimum payment requirements on credit cards, waiving or refunding different fees, and not reporting payment deferrals such as late payments to credit bureaus for up-to-date clients," says Benet Wilson, credit cards editor at The Points Guy. "It's best to check with your card issuer to see what help is available."

In response to the widespread need for relief, card issuers are becoming more flexible, Rossman told Grow, so you probably won't have to do too much "begging or explaining" to get a break.

Still, Rossman points out, "if you need to carry a balance, you shouldn't be as concerned with rewards. You need to prioritize your interest rate."

Read the fine print

Rewards cards can help you save, but sometimes those savings come at a cost.

If you end up opening a new card, read the fine print. For starters, rewards cards tend to have higher annual percentage rates (APRs) and annual fees associated with them than other types of credit cards. The average APR on rewards cards is 15.82%, while a low-interest credit card has an average APR of 12.79%.

So before you commit to a rewards card, do the math: If your rewards offset the annual fee, then the upfront cost might be worth it. If your potential savings is canceled out by a high APR or annual fees, then you're better off with a no-fee card that doesn't offer rewards.

"Making a cash-back credit card work for you means using it only to buy things that you would have bought otherwise with a cash or debit card," Kheel told Grow. "If you can be disciplined about your budget and not overspend, a rewards credit card that earns cash back is like gold."

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