Credit card companies offer a number of rewards that will put cash back into your pocket or help you save for a vacation that’s paid with points. These programs have many benefits, but they are also confusing. If you’ve ever purchased gas at the store down the road or picked up groceries at a small market and haven’t earned rewards points, merchant category codes (MCCs) could be the reason that you lost money.
You don’t need to worry about merchant category codes if your credit card provides flat-rate rewards on all of your purchases. On the other hand, merchant codes are important if your credit card has rotating bonus categories or extra rewards points for purchases at specific businesses like restaurants, grocery stores or gas stations. Here are a few things that can help you to maximize your credit card rewards every month.
How Merchant Category Codes Are Used
The four-digit merchant codes are a mystery to many consumers. It’s not surprising since they’re used by credit card issuers and the IRS. Credit card companies sort businesses and transactions by industry or the type of products that the business sells. With some rewards cards, the MCC determines what transactions are eligible for bonus points or additional cash back.
The IRS uses MCCs because service-based businesses like airlines and health care offices must report their transactions. Retail outlets and companies that sell products don’t have the same reporting requirements. These codes also determine how much the credit card company charges for processing the transactions. MCCs seem straightforward, but they aren’t because businesses are classified according to their primary industry.
When Stores Aren’t What They Seem
These days, the majority of stores offer many different items. This creates a problem for consumers because businesses aren’t always listed in the most obvious category. Gas stations are sometimes miscellaneous food stores. Big box stores like Target and Walmart are usually classified as supermarkets, and Amazon is often categorized as a bookstore although it now sells everything under the sun. However, American Express calls these businesses superstores, which shows that what works with one card issuer may not work with another.
By understanding merchant codes and your credit card’s rewards structure, these categories can work in your favor. Consider the following guidelines when comparing rewards categories and deciding which card to use for purchases.
- Gas stations are usually defined as standalone businesses, so if you fill up your tank at the grocery store, you won’t earn points.
- Grocery stores include traditional supermarkets as well as some big box companies. Purchases from department stores, convenience stores, specialty retailers, variety stores or discount shops will not earn bonus points.
- Stores like Sam’s Club, BJ’s and Costco are listed as wholesale clubs, so you’ll only earn bonus points if your card has a promo for that category.
- Ground transportation services often appear in rotating rewards categories, and this industry is particularly varied. It usually includes services like taxis, buses, trains, Uber and ferries. If you purchase a ticket through a third party, it won’t count.
- Department stores include regional and national companies like Belk, Macy’s and J.C. Penney. To make sure that you earn rewards on these purchases, check with your credit card issuer.
- When credit card companies offer a promotion on purchases made at home improvement stores, you need to read the fine print. There are different category codes for hardware stores, lumber suppliers and home improvement warehouses.
If you’re planning a major purchase or trying to maximize your rewards, payment processors like Amex, Discover, Mastercard and Visa provide a number of tools for looking up merchant codes and categories. Most card issuers will also provide information about their rewards structure and merchant categories online. If you still need assistance, you can always call the customer service number on the back of your card.