Best Credit Card For Grocery Store Spend

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This morning I wrote a post about which credit cards I use for different bonus categories. The number of cards offering lucrative bonus categories has increased significantly over the past few years, so the decision of which credit card to use has required more thought as well.

On that post, reader Jyoti left the following comment:

This is helpful! I see the Amex EverydaySM Preferred has an annual fee of $95 – how would you calculate the cost/benefit of getting this card just for the grocery bonus? Also – I looked on the site – it looks like it is just 3x bonus for the grocery category?

Credit card spend at grocery stores is an interesting topic, given that American Express seems to have a stronghold on offering bonuses in that category.

For example, when it comes to airfare, the Citi Prestige® CardCiti ThankYou® Premier Card, and Premier Rewards Gold Card from American Express all offer triple points, while the Chase Sapphire Preferred® Card offers double points. So you really can’t go wrong, regardless of which option you select.

Similarly, for dining, the Citi ThankYou® Premier CardPremier Rewards Gold Card from American Express, and Chase Sapphire Preferred® Card all offer double points on US dining, so the best card for your circumstances depends on which points currency you value most.

Which cards offer the best return on groceries?

But that’s not the case with grocery store purchases. There are no Chase or Citi cards accruing flexible points currencies which consistently offer bonus points on grocery store purchases. However, there are several American Express cards offering bonus points at grocery stores:

Groceries

Crunching the numbers on the best

Of those cards the Amex EveryDay® Preferred Credit Card and Blue Cash Preferred® Card from American Express are the most compelling, in my opinion. I value Membership Rewards points at ~1.8 cents each, so three Membership Rewards points per dollar spent is like a 5.4% return to me.

That being said, the Amex EveryDay Preferred Card offers a 50% points bonus when you make 30 transactions per billing cycle. That means assuming you make those transactions, you’d be earning a return of 4.5 Membership Rewards points per dollar spent. At a value of 1.8 cents each, that’s a return of 8.1%.

Amex EveryDay vs. EveryDay Preferred?

Getting back to the original question, let’s look at the actual breakeven point of the Amex EveryDay® Preferred Credit Card if you were going to use it exclusively for grocery store purchases. The card has a $95 annual fee. I value Membership Rewards points at 1.8 cents each, so by my valuation you’d have to generate an incremental ~5,300 Membership Rewards points to break even, compared to the next best alternative.

Let’s assume the alternative is using the Amex EveryDay® Credit Card, which offers 2x points at grocery stores but doesn’t have an annual fee.

Here’s how those two cards compare when it comes to grocery store spend:

Amex EveryDay® Preferred Credit

  • 3x points per dollar spent at grocery stores
  • 4.5x points per dollar spent at grocery stores with 30 transactions per billing cycle (50% points bonus)
  • 8.1% return (with 30 transactions per billing cycle)

Amex EveryDay® Credit Card

  • 2x points per dollar spent at grocery stores
  • 2.4x points per dollar spent at grocery stores with 20 transactions per billing cycle (20% points bonus)
  • 4.3% return (with 20 transactions per billing cycle)

So if optimizing both cards, the difference in return is 3.8%. In order to cover that $95 annual fee, you’d have to spend $2,500 on groceries per year on the Amex EveryDay® Preferred Credit to come out ahead over the Amex EveryDay® Credit Card.

Assuming you aren’t able to complete the 20-30 transactions per billing cycle required to earn the 20-50% points bonus, then the difference in return is 1.8% (the difference between earning 2x and 3x points per dollar spent). In that instance, you’d have to spend ~$5,300 at grocery stores per year to justify the card.

Bottom line

It’s quite tough to directly quantify the breakeven point for grocery spend on the Amex EveryDay® Preferred Credit. That’s because:

  • The return you get on the card varies based on whether you’re able to get 30 transactions per billing cycle or not
  • It depends which other card you’re using as the basis of comparison in establishing the breakeven point; given how few cards have bonus categories for grocery store purchases, that’s not always so straightforward

But all things considered it doesn’t take much grocery store spend to come out ahead with the Amex EveryDay® Preferred Credit. Assuming you can complete 30 transactions per billing cycle and qualify for the 50% points bonus, this isn’t just the most lucrative card for grocery store purchases, but also arguably the most lucrative for everyday spend… at least it’s what I use nowadays.


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Comments

  1. Can I be Mark for minute, pretty please? Ok, here goes:

    So, now you’re an expert on grocery spending?

  2. So, should I use the Amex EveryDay Preferred or should I use the Chase Sapphire Preferred as a primary card for everyday spend? Which is better?

  3. @ Nolan — Personally I value Ultimate Rewards and Membership Rewards points at 1.8 cents each. Assuming you can hit the 30 transactions per billing cycle, which activates the 50% bonus, I’d go with the EveryDay Preferred.

  4. i hate AFs so I went with the Amex Everyday. Then I MSed the$6,000 at grocery stores to earn 14,400 MR for $72. But I could have earned 27,000 MR for the same amount of spend. That’s an extra 12,600 MR for $95 annual fee. I should have done it!!

  5. You did not mention Diners Club Elite. I have been using it for groceries for almost a year and feel very satisfied

  6. @ Joanna — I might be missing something, but I don’t think you can sign up for Diners cards anymore.

  7. Lucky,

    Could you please specify which “grocery stores” qualify the MR points?

    I am sure Target and Walmart does NOT qualify. How about little pops and moms grocery stores or perhaps Japanese, Korean or Indian grocery stores?

    TIA

  8. @ Leo — Correct, Wal-Mart and Target don’t count because they’re not “standalone” grocery stores. As far as “mom and pop” stores go, it depends how they choose to categorize themselves as merchants. Generally speaking they should count as grocery stores if they’re standalone and that’s what they are.

  9. Lucky,
    I agree that DC Elite may be not available at the moment for new users, but many people still use it

  10. Everyone has their own valuation on points, but why not value AX points at 2.5 cents each since that how much it costs to buy MR points should you need to top off for an award?

    Lucky did you take the picture of F&E yourself?

    Little mom and pop groceries should qualify but you may find occasional quirks. I’ve been to ice cream shops classified as gas stations and grocery stores. Presumably this was due to the owner’s previous credit card setup perhaps? Also, 7-Elevens are usually classified as gas stations even at locations that don’t sell gas.

    @Freetravel guy. FYI this method got many people’s new Diners Club cards cancelled. Yes you can do it, but you have to be careful to not make it seem like you’re abusing the system.

  11. Any idea if there is a limit on how much grocery spend gets 6x HH points on the Hilton HHonors Surpass card? I spend $5000-$6000 a month at grocery stores (mostly Visa gift cards) and am looking for the best card that doesn’t have a cap on grocery spend. Right now I’m exclusively using the Amex PRG for the 2x points no limit, but would consider switching to Surpass for 6x HH points.

  12. @ Kurt — I don’t believe there’s a limit. For what it’s worth, I only value Hilton points at ~0.4 cents each, so to me even with 6x points that’s a return of ~2.4%. That’s not all that great. For example, I’d rather use the EveryDay Preferred even after the $6,000 limit, and end up with 1.5x Membership Rewards points per dollar spent (assuming I’m making 30 transactions per billing cycle).

  13. @ Mark O — Good point. Even so, if you value their points at 0.7 cents each, that’s a return of 1.4%, which is still pretty lame.

  14. @ askmrlee — I don’t value miles/points based on what the airlines directly sell them for, given that the pricing is somewhat arbitrary. By that logic, Southwest Rapid Rewards points would be worth over two cents each, even though they can only be redeemed for at most ~1.5 cents each.

  15. @ Ms. M — Well because the net return is ~2%. So that’s no different than many cards which offer 1x point per dollar which is much more valuable.

  16. Thanks for making my question a separate blog post! I currently have the Chase Freedom, but that 5x grocery store bonus is only for 3 months so I wanted a year-round card I can use for one of my largest expense categories (thank you, Whole Foods!). Are there are any flexible currency credit cards that offer better bonuses than the Chase Freedom for the grocery category that would be best suited to someone who travels on United frequently? A large portion of my miles are in my United account, so I am trying to gauge how useful the Amex could be for me based on your advice above. Also – did I read correctly on the Amex site that to transfer miles that 1,000 Membership Rewards points converts to 750 delta points?

  17. @ Jyoti — Membership Rewards points transfer to Delta SkyMiles at a 1:1 ratio, for what it’s worth. While you can’t transfer them directly to United, you can transfer them to one of their partners and book travel on United, like through Air Canada Aeroplan, ANA, etc. There are lots of great options, and given how high the return is, I think the card would be well worth it in your case.

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