Here’s how you can save big on groceries using credit cards

Grocery Ecommerce RevolutionPhotoMIX-Company / Pixabay

One easy way to offset your monthly grocery bill is to make use of the rewards that your credit card has to offer. However, a recent survey notes that most users with rewards credit cards are missing out on the rewards. Such users are unable to benefit from their credit cards because they are mostly using cash or a debit card to pay for items or a service.

How to save on groceries

According to a new Bankrate survey, about 55% of the rewards credit card holders who pay their bills in full, are missing out on the rewards because they are using cash or debit. The survey found that about 44% of the cardholders use cash or a debit card to pay for groceries, while 43% use a debit card or cash to pay at a restaurant.

On the other hand, users prefer to use a credit card when paying airfare, hotel and gas. As per the survey, about 85%, 84% and 63% use a credit card to pay for airfare, hotel and gas respectively. Bankrate’s survey (conducted by YouGov) sampled 2,716 U.S. adults of which 1,625 were rewards card holders. According to Bankrate, the result of the survey is in general representative of all U.S. adults.

Image Source: Bankrate (screenshot)

It can be said that those paying for their groceries and dining via cash or debit card are missing out on the rewards that can help them offset some of their costs. Rewards credit cards offer up to 6% cash back on common categories.

Thus, those who fully pay off their credit card balances each month should make all their payments, including groceries or restaurants, with credit cards. Along with rewards points, the rewards credit cards offer other benefits as well. These benefits could be travel insurance, purchase protection, better grace period between purchases and payment due dates and more.

How much can you save on groceries?

An average American spends about $5,019 a year (or about $418 a month) on groceries, as per the spending data from the location intelligence firm Esri. On the other hand, Americans spend about $3,365 on dining out. This means those with rewards credit cards can save a significant amount by using a credit card when buying groceries or paying for dining out.

The best grocery rewards cards can offer up to 6% cash back, but they usually exclude stores such as Costco, BJ’s, Target and Walmart. Users, however, can still benefit by heading to stores such as Whole Foods, Krogers and other big retailers.

Thus to help you save the maximum amount on your groceries, listed below are the best credit cards for shopping for groceries.

Best rewards credit cards for groceries

Blue Cash Preferred® Card from American Express – this card offers the highest cash back (of 6%) on spending at qualifying U.S. supermarkets. You can earn about $300 a year when using this card at qualifying supermarkets. Apart from groceries, this card also offers 6% cash back on streaming subscriptions, 3% cash back at gas stations, 3% cash back on traveling expenses (taxi, trains, buses and more) and 1% cash back on all other purchases. The card offers other benefits as well, but it does come with a $95 annual fee.

American Express® Gold Card – this card offers 4X Membership Rewards® points when you use it at U.S. supermarkets and restaurants worldwide. It also offers reward points (3X Membership Rewards®) on travel booking. On average, you can earn about $201 in cash back annually by using it at qualifying supermarkets. Along with rewards, the cardholders can also benefit from credits, such as a $120 dining credit at Grubhub, The Cheesecake Factory, participating Shake Shack locations and others. Additionally, there is an annual $100 airline fee credit, which covers in-flight cost for food, seat upgrades and baggage fees. The card, however, has a $250 annual fee, which can be offset by using all the added card benefits.

Amazon Prime Rewards Visa Signature® Card – if you shop for groceries online from Whole Foods or Amazon.com, then this card is definitely for you. It gives cash back of 5% on such purchases. Moreover, there is no limit on the number of points you can earn. Apart from groceries, you get 2% cash back on using it for gas, drug store purchases and at restaurants. Though the card has no annual fee, you need to have Prime membership to get the card. If you are already a Prime member, then you should definitely use this card to magnify your savings.

Blue Cash Everyday® Card from American Express – if you don’t have a Prime membership, but want a card with no annual fee, then you can go for this card. This card offers 3% cash back on spending (up to $6,000 per year) at U.S. supermarkets. Other than groceries, you can earn 2% cash back at U.S. gas stations and 1% cash back on all other purchases.

There are a few more cards that you can go for such as the PenFed Platinum Rewards Visa Signature® Card, Citi® Double Cash Card, Capital One® SavorOne® Cash Rewards Credit Card, U.S. Bank Cash+™ Visa Signature® Card, and Bank of America® Cash Rewards credit card.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

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