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Getting the most from rewards cards

How the card company categorizes your purchase could affect the amount of rewards or cash back you get.

By Karen Datko Jul 20, 2010 9:23AM

This post comes from Jim Wang at partner blog Bargaineering.


One of the reasons we put 99.9% of our spending on credit cards is the rewards. A percent or more back in cash or reward points isn't going to make anyone rich, but it's a little better than getting nothing back.


At the moment we use only two credit cards, so keeping the bonus rewards categories in order is fairly simple. But there was a time when I used as many as four cards. You want to use the card that gives you the most rewards for the type of purchase you make. One important lesson I learned early on was that not all purchases are categorized as you would intuitively expect.


Each transaction on your rewards card statement will include a "merchant category" or, simply, "category." It's important to check your statement to find out whether your transactions are being coded as you expect and change which card you use accordingly. Let me explain with a few examples.

Don't assume a restaurant is categorized as a restaurant. A prime example of ambiguity is if you dine in a hotel restaurant. Depending on the hotel, your purchase may be considered a "lodging" purchase or a "restaurant" purchase.

We recently attended a wedding at the Renaissance Hotel and I bought some drinks at the bar. At any standalone bar, I'm almost certain the purchase would be considered a "restaurant/eating place" purchase. The drinks, however, were considered a "lodging" purchase on my Citi bill because the Renaissance Hotel charged my card. Now that I'm aware of this, I'll use a card that gives me higher rewards on lodging, even though I'm using it in the hotel restaurant.

In these occasional situations, it's not important to know how the purchase will be coded. But if you often find yourself in the same establishments, see how the purchase is coded by reviewing your statement after the fact, and you can earn a little extra cash back the next time you're there.

The same applies to places where you regularly shop., for instance, is considered a bookstore by Citi.


Take a look at your statement. Are you surprised by any of the categories?


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