Why You Missed Out on That Credit Card Reward Bonus

In the sea of cash-back credit cards out there, many will offer more than the standard 1% cash back on purchases on specific categories — including gas, drug stores and groceries. You may have signed up for one just so you can rack up the cash back on certain purchases.

But if your 3% cash back on groceries credit card didn’t give the correct amount of cash back on some purchases that were clearly groceries, there’s a reason for that. You didn’t get the credit card reward bonus because the store’s merchant code — not the items purchased — didn’t match the correct bonus cash-back category.

The Merchant Code

Every store that accepts cards will have a designated merchant code, which typically identifies the type of goods or services sold at the store. Card issuers have a specific list of merchant codes that would qualify for cash back.

Visa has a search tool that will show the merchant code of a particular store, which applies to all Visa cards. There are no similar tools from MasterCard, American Express and Discover, but it’s safe to assume that merchant codes are roughly the same across all card payment networks.

Many travel companies, including airlines and hotels, get their own specific merchant code, which makes it easy to recognize purchases for travel rewards credit cards.

In the case of missing cash back, you’ll often find that it was the store that wasn’t listed under a qualifying merchant code. For example, many Walmart stores will sell groceries but some of them are classified as “discount stores/warehouse/wholesale” according to Visa’s merchant tool. Using a grocery cash-back credit card won’t yield the maximum amount of cash back, even if your entire purchase was made up of groceries.

Often, it is futile to dispute missing cash back because, in their cardholder agreements, issuers clearly state that cash back is given based on merchant codes. Card issuers also list the qualifying merchant codes that are associated with the categories.

If you’re unsure about a store’s merchant code, use Visa’s tool to find out if you’ll earn bonus cash back at that store. Some card issuers will also display your card transactions with their purchase categories on your monthly statement.

What’s Working in Your Favor

Although the merchant coding system might make you miss out on cash back, there are benefits to it. Since you earn cash back depending on where you swipe your card, in many cases, most things sold by a qualifying merchant will generate cash back.

The technicality is a benefit when you can buy items for which you would normally not earn bonus cash back. For example, many supermarkets sell more than just groceries. They also sell household items and appliances, which may be eligible for bonus cash back under the “groceries” category, if they were purchased at a store with the “grocery store” merchant code.

The caveat, however, is to read your credit card agreement to make sure there aren’t exclusions. However, if the issuer does not bar gift cards from rewards, you can also end up earning plenty of cash back on a variety of items that you might not have thought was possible. Major brands such as The GAP, Macy’s and Best Buy will have gift cards in supermarkets. After purchasing these gift cards, you can use them for yourself, effectively generating cash back at these retailers with a cash-back credit card that focuses on groceries.

While this “exploit” is common at supermarkets, it can be viable at other retailers, too. Gas stations and department stores also sell a large selection of items. But as always, read the fine print before you shop.

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