A series of supermarket checkout aisles

If you’ve chosen a particular cash-back credit card because it offers generous incentives for grocery purchases, you may not be reaping all of the benefits you expect.

That’s for one simple reason. It’s not the fact that something happens to be a grocery item, like bread or milk, that makes it eligible for a cash-back reward, but the kind of store it's sold in. And to complicate matters even more, not all stores that sell grocery items are viewed the same way by credit card companies.

For example, if you’re buying bread and milk from the corner convenience store when your card company credits grocery purchases only from bona fide supermarkets, you may in effect be leaving money on the table. Ditto the Brie and crackers you buy from your favorite specialty cheese store, depending on the terms of your particular credit card.

On the other hand, you may have a card that takes a more generous view, awarding cash-back rewards for grocery purchases made at, say, a bakery or cheese shop as well as a supermarket.

If your card rewards you generously for grocery purchases and you make many of them at stores that don’t qualify for the rebate, you could be out a significant amount of money.  A family of four spending about $6,000 a year, for example, would get almost $200 back using a 3 percent cash-back card.

To get the most out of your supermarkets rewards, follow this rule of thumb: It’s not what you’re buying but where you buy it that counts. Key, too, is knowing which kinds of stores your credit card company will—and won’t—grant grocery cash-back rewards for. Follow these tips to find out.

Crack the Credit Card Code

“It all traces back to something called the merchant category code,” or MCC, explains Ted Rossman, an industry analyst with Creditcards.com.

The four credit card networks—American Express, Discover, Mastercard and Visa—assign each retailer a four-digit code based on its primary line of business, and these tags can differ from network to network. But it’s not that easy to find this information.

More on Reward Cards

Visa's online tool will give you the merchant category for each establishment that accepts the card. Unless it’s a chain, you’ll need to input the location of the store. The specific category should show up on your statement, but if you don’t want to wait, call up the issuer and ask before you run up a tab.

Banks that issue cards have this information, too. Citibank’s guide to MCCs (PDF) lists grocery stores and supermarkets as well as categories for at least six other kinds of food sellers: wholesale clubs, bakeries, stores selling dairy products, miscellaneous and specialty food stores, and even a distinct class for candy, nut, and confectionery stores.

Do Your Research

The next step is to figure out which stores your card will count in its grocery cash-back calculations. Many cards give you a grocery rebate only for purchases made at a store coded as a supermarket or grocery store; what this category includes can vary from network to network. Then you need to find out whether the stores you patronize—or would like to—belong to that category.

You can get some guidance from the terms and conditions spelled out in the card company's brochures or online FAQs. The American Express Blue Cash Everyday card, which pays 3 percent on supermarket buys (or its fancier cousin, Blue Cash Preferred, which gives 6 percent back for an annual $95 fee), basically restrict the benefits to bona fide market brands like ShopRite or Winn-Dixie. Smaller stores and specialty shops don’t qualify.

But the Bank of America Cash Rewards card defines grocery stores more loosely to cover a wider range of categories, including bakeries and dairy-product stores—so your favorite cake shop or cheese store might count. The trade-off is that this card gives a less generous 2 percent cash back.

Beware the Superstore Loophole

If you like stocking up on staples at a warehouse like Costco, beware: Purchases may be excluded from grocery cash-back deals with your card.

“The major credit cards typically don't count stores like Costco, Target, and Walmart as grocery stores, even if you are buying groceries there,” Rossman says.

In general, he says, big box and warehouse club stores will not get the cash-back incentive, although it’s worth noting that most of these chains have their own branded cards that give cash back.

An exception: The Bank of America Cash Rewards, which gives 2 percent back, also includes eligible wholesale clubs in its grocery store benefits category.

Maximize Your Spending at Stores That Work for Rewards

Once you’ve established that you’re at a qualifying store, you can stop worrying about what will be counted as supermarket buys.

Almost all merchandise you buy there is automatically credited as a grocery item, be it lettuce or lightbulbs—up to pricier products like pots and pans, lawn furniture, and even outdoor grills, which can be found at some of the bigger supermarket chains. And most have copious amounts of drugstore and hardware items that can add to your cash-back savings.

But watch your total monthly spending, because many of these cards have caps on rewards. Discover caps qualifying purchases at $1,500 per quarter (or $75 cash back); Amex’s Blue Cash Preferred Rewards card has a $6,000 annual limit (or $360 cash back).

If you are well below your cap, it may be tempting to use the card for all sorts of merchandise not considered conventional supermarket items. But the more you stray from the proverbial bread and butter, the more you risk wiping out your savings if you’re paying more for items you could get elsewhere for less.  

A recent check of prices at a Stop & Shop in the New York City suburb of Dobbs Ferry, for example, found a wide array of prices in the health and beauty aisle, including a selection of Crest teeth whitening kits that cost up to $69.99 for a pack of 21 treatments. If you’re shopping for one anyway, you could snap it up there because at least you’re getting some money back. But we found the same kit online for $54.95 on Amazon.

Another rewards hack: Check out the gift card selection at your local market and buy them to save on clothing, restaurant meals, and items from other retailers. The cards could be wrapped into your total supermarket purchase and give you a bit of money back for that latte habit at Starbucks.

But check with the card company or store first. Under some cash-back programs, a prepaid card or a gift card isn't eligible for cash-back rewards. 

Watch Your Statements

No one wants to go into debt to pay for basic necessities. “The rewards game is for those who routinely pay their balances in full every month,” says Greg McBride, an analyst at Bankrate. “If you even carry a balance occasionally, forget about it. Your focus needs to be on minimizing your finance charges and getting your debt paid off." With APRs  at close to 18 percent, that’s advice to keep in mind.