Editorial Policy

Best Cash-Back Credit Cards for Groceries

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By Eva Norlyk Smith, Ph.D.
May 3, 2011

As the rising cost of fuel continues to drive up food prices, mounting grocery bills are becoming a problem for many families.

However, one good way to stretch your grocery dollars even further this summer is to combine in-store coupons and special offers with a rewards credit card that offers 3 to 5 percent cash-back.

Cash-back cards come in many shapes and sizes, so make sure you research the terms and conditions for each individual card before you sign up for a new one. Some features to watch out for when shopping around include:

  • The card’s rewards structure. Some rewards cards give you cash-back or bonus points for making purchases on groceries, while others give you a discount at checkout.
  • Flexibility of the card. Some cards will let you use your rewards at any grocery or convenience store; however, others will restrict you to specific retailers.
  • Spending ceilings. Some cards also limit how much you can earn, so check to see if there’s a maximum on your card.
  • Time-limits. Some cards only feature the top-tier cash-back rewards for a limited period of time. That’s why your best strategy is to mix and match credit cards to optimize cash-back earnings.

With these pointers in mind, here are CreditCardGuide.com’s picks for the best cash-back credit cards for grocery purchases.

The American Express Blue Cash Everyday card and the Blue Cash Preferred card
American Express has done away with the popular Blue Cash card — disappointing some of the card’s most ardent fans. The American Express Blue Cash card has long been praised as one of the best cash-back credit cards around, thanks in part to the card’s 5 percent cash-back on grocery purchases. The card’s only drawback, according to fans: Its biggest cash-back rewards only kicked in after the first $6,500 in annual charges.

However, the new and improved Blue Cash Everyday card has nixed that problem for cardholders — giving American Express Blue fans one more reason to cheer. The Blue Cash Everyday card doesn’t require cardholders to spend $6,500 before they receive the card’s best rewards; but it still features above average rewards on everyday purchases, including: 3 percent cash-back at supermarkets, 2 percent cash-back at gas stations and department stores and 1 percent cash-back everywhere else. The card comes without an annual fee and features a 0 percent APR on purchases for up to 12 months after you open the card.

For cardholders who don’t mind paying a $75 annual fee (waived the first year), the American Express Blue Cash Preferred card also offers 6 percent cash-back on groceries, 3 percent cash-back on gas and department store purchases and 1 percent cash-back on everything else.

The introduction of the new Blue Cash cards was prompted by consumer requests for a simpler cash-back card, says Leah Gerstner, VP of Public Affairs for American Express.

“Many cash-back cards are confusing to people, because of the caps and spending thresholds,” says Gerstner. “The new Blue Cash cards feature a simpler rewards structure, and they aim to help people out in the categories where they are spending the most, particularly on groceries and gas.”

Rewards earnings can be redeemed through a cash-back check, or they can be put toward a variety of gift cards or merchandise. There is also no limit to how much you can earn.

What we like: The cash-back amount on the Blue cash cards is higher than average — including on the Blue Cash Everyday card that doesn’t feature an annual fee. And rewards are unlimited, which is a huge bonus — as is the fact that you can open additional cards for other family members. Plus, cardholders have a great deal of flexibility in how they redeem their cash-back rewards. For example, American Express will let cardholders use their rewards to automatically pay their bills.

The Chase Freedom card
The Chase Freedom card was recently named the “best overall card” by CBS MoneyWatch. The Freedom card gives cardholders a full 5 percent cash-back on groceries; but there’s a catch: The 5 percent cash-back categories change every three months. And at all other times, cash-back earnings are limited to 1 percent.

Another drawback is that cardholders can only earn 5 percent cash-back on purchases up to $1,500. Of course, one way to avoid the program’s spending ceiling is for you and your spouse to take out separate cards. New cardholders get a $100 cash-back bonus after spending $500 in the first three months.

What we like: Although the program’s $1,500 limit on 5 percent cash-back earnings may not be ideal, it’s a good bargain compared to the similar Discover More card’s 5 percent cash-back program. That program caps rewards after just $300 in spending. Plus, the Chase Freedom card has no annual fee and your rewards don’t expire, so you can save them for a larger purchase.