The Best Grocery Credit Cards

Originally posted on October 1st, 2008

Let's face it, we're living in tough times. From Wall Street to Main Street everyone is feeling the fiscal pinch. It may not officially be a recession but it sure feels like one. Many folks have already cut back on spending to make ends meet, but there's still the daunting task of paying for everyday purchases. Necessities like gas, food and utilities are taking an increasingly bigger chunk of people's paychecks.

Despite all the bad news there is a silver lining, however slim. While certain expenses are unavoidable there is a way to at least reclaim some of your money. And it comes from a source that might surprise some people: credit cards. If you're old enough and can afford to pay the balance each month there's no reason you shouldn't own a rewards or cash back credit card. Used responsibly a credit card offers an array of benefits:

• Pay later. There is usually a 20-day grace period to pay off the balance interest-free.
  
• Build a credit history. Prove to lenders you're fiscally responsible.
  
• No need to carry wads of cash or loose change. Stay organized and sanitary.
  
• Added security with fraud protection and extended warranty coverage.
  

Rewards and cash back credit cards provide all the features listed above -- plus a little extra something for your wallet. Some rewards cards offer free airline miles or concert tickets. Others give out points that can be redeemed for gift certificates, free hotel stays and other perks. And cash back cards are just that -- cards that return a small percentage of the purchase price back to the owner's account.

There are hundreds if not thousands of rewards and cash back credit cards to choose from. Yet no two cards are exact. Different programs exist for different people. Spending habits of a truck driver aren't the same as those of a work-at-home entrepreneur. The former would benefit greatly from gasoline discounts while the latter would prefer extra savings on office supplies. Luckily there's a credit card for almost everyone.

No matter who you are or what you do chances are you buy groceries. In fact, it's safe to assume most people spend a lot of money at supermarkets. Credit card companies know this, which explains why so many of them offer rewards for this specific spending category. But what companies and cards can save you the most money on groceries?

When it comes to credit cards always read the fine print. Understand the terms. That way there are no surprises. Like the fact warehouse clubs such as Costco and Sam's Club are not considered supermarkets. They either have their own category or are simply not considered everyday purchases. These conditions may change the card that is right for you.

I don't pretend to have all the answers, but I do have some knowledge on this topic. I've spent many hours researching this very subject for myself. So without further ado here's my list for the best rewards and cash back credit cards for buying groceries at the supermarket:

Last Updated: 6/15/09

Chase Freedom Visa Card

• Receive a $50 gift card after you make your first purchase
• 3% cash back in rotating categories like gas, home improvement and department stores.
• 1% cash back for every $1 you spend on all other purchase
• Up to an additional 10% Cash Back and even as much as 20% at select merchants when you shop online through Chase.
• 0% introduction APR
  
• No Annual Fee

This card, in my opinion, used to be the best overall cash back card. Unfortunately the 3% bonus no longer adjusts to a cardholder's spending habits. Now the cardholder is eligible for "quarterly reward bonuses." The extra 3% rotates for various categories throughout the year, much like with the Discover More Card. Personally I don't like financial terms to be dictated by random chance or the season. Still, this is one of the more reliable rewards cards available.


Blue Cash from American Express

• Earn up to 5% cash back on everyday purchases - even gas!
• 0% Intro APR for up to 12 months on purchases
• Low Balance Transfer APR - 2.99% for 12 months
• No Annual Fee
  

Here's how the AMEX Blue Cash reward system works: up to $6,500 in annual purchases cardholders receive 1% cash back on everyday purchases (gas, groceries and drugstores) and .5% on other purchases. At $6,501.01 and beyond Blue Cash members earn 5% and 1.5% respectively. While the tier system may discourage those who want a fixed cash back rate, for big spenders Blue Cash is definitely worth considering.


Pentagon Federal Credit Union Visa Platinum Gas Cash Reward

• Earn 2% cash back on supermarket purchases
• Earn 5% cash back from gas purchases paid at the pump
• Earn 1.25% cash back from all purchases
• Limited Time - 2.99% APR
  
• No Annual Fee

While most credit card benefits have withered during this recession the Platinum Gas Card continues to shine. Because this card is offered by a credit union it doesn't receive much attention. That's a shame as it's one of the few cash back credit cards that has no restrictions or tiers. Rewards are automatically credited to each monthly statement: no need to redeem anything or worry about expiring points. Most cash back cards offer 1% on purchases; PenFed gives an extra quarter point in addition to providing excellent savings for groceries and gas. I love PenFed and use it as my main credit card. One drawback is that for non-military individuals there is a one-time $25 fee to join the credit union.


Capital One No Hassle Points Rewards (Excellent Credit)

• 1 point per dollar on all regular purchases
• 2 points per dollar on purchases at gas stations and major grocery and drug stores
• 0% APR until May 2010; after that 13.9% APR
• No Annual Fee
  

An above average rewards card that looks better as the credit crunch continues to squeeze. I don't how well the points convert to rewards but from what I've read Capital One runs a fair program. There's no limit to how many No Hassle Points you can accumulate and they never expire. No purchase APR for almost one year is very appealing.


Citi Diamond Preferred Rewards Card

• 5 reward points for every $1 spent on purchases at supermarkets, drugstores and gas stations for 12 months; 1 point for every $1 on all other purchases
• 0% APR on balance transfers for up to 12 months
  
• No Annual Fee
  

The major problem with Citi rewards cards is the ThankYou Points program. ThankYou Points don't convert well into cash, which severely limits the usefulness of any Citi credit card. In a best-case scenario the Citi Diamond Preferred Rewards Card is worth keeping for a year. After 12 months there's no "point" using a card that gives back less than 1%. Also worth noting is the 0% balance transfer rate, which may be of use to those with multiple credit cards.