When you use a debit card at a retail location, they'll often ask you if you want cash back. Can you get cash back with a credit card at a grocery store like you can with a debit card?
At the same time, the term "cash back" also refers to another type of financial transaction-- receiving cash rewards for purchases made using a credit card. Can you receive cash back rewards when you shop at grocery stores?
Now let's dive in and explore everything you need to know about cash back credit cards, getting cash back at a grocery store, and cash advances.
Before we look into whether you can get cash back with a credit card at a grocery store, we need to split some hairs about what one could mean when they use the term "cash back."
Getting cash back can mean:
Making this distinction is important in order to answer the question at hand adequately. Let's take a closer look at the difference between "cash back" and a "cash advance" before answering the following questions:
Another term we'll want to enter into the discussion is "cash advance."
When you take out a cash advance, you are able to use your credit card to get cash at an ATM or a bank. However, rather than withdrawing the funds from an account that holds your own money (like when you use a debit card at an ATM,) you are, instead, taking out a short-term cash loan.
Many credit cards offer this feature, though typically at a higher-than-usual interest rate. When you take out a cash advance, you are essentially buying cash with your line of credit rather than specific services or goods.
If you need to get cash from your credit card, it is possible. However, it's crucial to understand that it isn't the same thing as taking out money from an ATM with your debit card or getting cash back at a grocery store.
A cash advance can be convenient if you only have your card with you but you want to purchase something from a cash-only vendor. However, it's important to recognize that you'll pay fees and interest on this short-term loan-- there usually isn't the same grace period with cash advances as there are with purchases.
Sometimes, your credit card issuer will have you set up a PIN when you initiate your account. If this is the case, you can typically get a cash advance simply by using an ATM and entering this PIN code.
If you don't have a PIN, you can usually bring your credit card to a bank that is connected to your card's payment network to take out a cash advance. In order to complete the transaction, you'll need to show your ID.
Though getting a cash advance can be convenient or even a lifesaver when you're in a pinch, it's important to realize that they come at a cost.
There are several expenses typically associated with a cash advance from a credit card:
Getting a cash advance from your credit card is definitely not the cheapest way to access cash. You, therefore, really only want to use this as an emergency measure rather than your standard method of getting some cash.
When you go to a grocery store or other retail location, you are often able to get cash back when you make a purchase. However, this is only usually the case if you're using a debit card.
When you're using a debit card to make purchases, you are paying with your own money that comes straight from your bank account. On the other hand, when you use a credit card, you are borrowing money from a line of credit that you are obligated to repay.
This is the key reason why you can get cash back from a grocery store with a debit card and not a credit card. In order to get cash back with a debit card from a merchant, they simply have to overcharge your card and then give you the difference in cash.
The other type of financial transaction that "cashback" refers to is the credit card reward that gives consumers a small percentage of the amount of money they've spent on purchases back to the customer.
This is simply one of the styles of credit card rewards programs out there. Other rewards programs give cardholders points or miles that can be used to buy various goods or services. Cash-back, on the other hand, lets the cardholder receive actual cash instead.
There are a number of ways that cash-back rewards can be delivered to customers, including:
Pretty much every card issuer offers cards with cash-back benefits.
So, can you get cash back with a credit card at a grocery store?
The answer is: yes and no.
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If you have a card that says it offers cash back for groceries, you might be wondering whether you can receive the reward for all purchases at a grocery store or just for food-related items.
You'll want to look at the fine print of your credit card rewards agreement to learn which grocery stores will qualify you for cashback. For example, many issuers won't offer the grocery store cashback rate for purchases made at big box stores, wholesale clubs, convenience stores, supercenters, and discount stores.
For example, let's say your card offers 2% cash back on groceries and 1% cash back on all of the other purchases you make. How do you know when you're receiving the 2% cashback versus the 1%?
In order to gain a greater understanding of what types of purchases you'll earn cashback for, you'll want to understand the concept of merchant category codes. These are four-digit numbers that credit card issuers use to categorize different businesses.
To determine whether purchases from a certain grocery store qualify for cash back, you can look at your credit card statement. Though it might not necessarily list the merchant code, it will typically offer a "merchant description" that lists the category of the merchant.
Every credit card issuer is going to have its own system and structure for cashback rewards programs. For example, some of them will offer percentages of purchases back to the customer based on the category. In contrast, others might offer a flat cash-back rate for purchases regardless of category.
Beyond that, other cards will give consumers the ability to choose which categories receive the highest percentage back or will rotate which categories receive the biggest percentage back.
Using a flat-rate cash-back credit card can be nice because you don't ever have to think about whether your purchases are earning cash back. No matter where you're shopping, a flat percentage amount will be applied to your purchases.
Some popular cards that offer flat rate cash back include:
- Wells Fargo Active Cash Card
- Capital One Quick Silver Cash Rewards Credit Card
- Fidelity Rewards Visa Signature Card
- Bank of America Unlimited Cash Rewards Credit Card
- American Express Cash Magnet Card
- PayPal Cashback Mastercard
Usually, these types of cards won't have rates any higher than 2%. This means that you can earn $20 every time you spend $1,000 dollars, no matter which merchant categories the purchases fall into.
Other cards will give consumers a higher cash back percentage for specific kinds of purchases. You'll usually hear these cards referred to as "bonus category cash back cards."
Some popular cards that offer bonus category cash back include:
- Citi Prestige (Feature categories: restaurants and air travel)
- Chase Sapphire Reserve (Feature categories: dining, air travel, hotels and car rentals, general travel)
- American Express Gold Card (Feature categories: U.S. supermarkets and restaurants)
- Citi Premier (Feature categories: supermarkets, hotels, gas stations)
- The Platinum Card from Americacn Express (Feature categories: flights booked with Amex travel or directly with airlines, prepiad hotels booked with Amex Travel)
A card like this might offer 2% or 3% cash back in certain categories, such as groceries, gas, or travel. For the rest of the purchase categories, they'll offer a smaller percentage of cashback, usually around 1%.
You can usually find higher cash back percentages through rotating cards than you can with flat rate cards. For example, certain types of purchases could earn you as much as 5% cashback.
However, truly benefiting from this type of card is more complex and requires some input on your end.
Some examples of popular rotating category cash back rewards cards include:
- Chase Freedom Flex
- Discover It Cash Back
- Chase Ultimate Rewards
Usually, you will have to activate the rotating bonus category before you are able to reap the rewards. The highest-earning categories will rotate quarterly.
Taking out a credit card cash advance can be tempting, particularly when you're in a pinch. Before you take out one of these short-term loans from your credit card issuer, though, you'll want to consider the pros and cons.
There are a few positive things about cash advances to mention before diving into the downsides:
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Now that we've considered why taking out a cash advance might be attractive from time to time let's take a closer look at why this really isn't something you want to do with any regularity.
Here are some reasons you might want to find an alternative way to access cash:
Finally, you'll also want to consider these factors when deciding whether a cash advance is the right choice:
Finally, let's take a look at some of the arguments for and against cash-back credit cards.
On the plus side, these cards:
On the other hand, there are some potential downsides you'll want to consider:
It's common for people to think of debit cards and credit cards as somewhat interchangeable, but the truth is they are very different ways of accessing cash. When you use a debit card, you are withdrawing money directly from your own account. When you use a credit card, you are borrowing money against a line of credit that's extended to you.
This difference is why you can't get cash back at a grocery store counter using a credit card, but you can with a debit card. If you want to take out cash from a credit card, you'll need to get a cash advance. These are easy to get if your issuer offers the service, but it is usually a very expensive way to borrow money.
On the other hand, you can earn cash-back rewards at grocery stores using some cash-back credit cards. While there is such a thing as a cash-back rewards debit card, these are not the standard by any means.
The more you know about your credit cards and how they work, the more able you are to take control of your credit and financial life. Taking the time to learn about things like cash back and cash advances can help you make smart financial decisions that pay dividends down the road.
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