College Connect: How to get paid for buying groceries (but it requires discipline)

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By Madeline O’Leary

I have a food-buying problem. That’s mainly due to the fact that I like to cook. But I’ve still been to the grocery store three times in the past week, and I’ve spent over $100 because of those visits. Aside from housing, it’s safe to say that the next largest chunk of my income evaporates at the grocery store. Soon, I plan to get a credit card, and I’ve conveniently discovered that I can get rewarded for simply spending a lot of my money on groceries (which is already a reality).

I’m sure you’ve heard your parents talk about racking up air miles by using their credit cards. Well, a similar perk exists with groceries. Before I describe some of these rewards programs, be sure to remember a few things about credit cards, and to then be rightly cautious:

• Most importantly, credit card companies seek profits. All companies do. But credit card companies can get tricky about how they create profits. One way is through shrinking or non-existent grace periods. Consumers used to be able to make purchases on their cards interest-free if they repaid within a 30-day grace period. For a lot of credit cards, that grace period has shrunk to 20 or 25 days. Some grace periods have been eliminated altogether, meaning that the company starts charging interest from the moment you make the purchase.
• Fixed interest rate cards can be increased. Everyone gets credit cards in the mail. Most of them come in shiny envelopes that read, “FIXED, LOW INTEREST RATE!!!!!!” That interest rate is only fixed for as long as the company wants it to me. All the company has to do before changing it is give you 15 days’ notice of the rate charge. Always open and read the mail that your credit card company sends you.
• Penalty rates can extend to all of your credit cards.
• There are no maximums for penalty rates.

Now that we covered that, here are several credit card options with some of the best grocery-buying rewards programs (thanks to Elizabeth Lang at WiseBread for originally providing the list).

Blue Cash Preferred® Card from American Express

After you make $1,000 in purchases with the card in the first three months you own it, you can get reward dollars redeemable for a $100 statement of credit. If you sign up for a new membership and meet the spending requirement in the same time period, you get one year of Amazon Prime, too. Amazon Prime members get unlimited free two-day shipping. If you spend up to $6,000 a year on groceries, you can earn 6 percent back in a statement of credit.

RedCard from Target

If you shop at a SuperTarget for groceries, this card gets you 5 percent off on all the items you buy at the register. So it’s not just for groceries. You can receive the discount on all purchases. There is no annual fee. The only bad thing is that you can’t use it outside of Target stores. Also, Target has had some public security issues lately.

Blue Cash Everyday® Card from American Express

This card is pretty similar to the Blue Cash Preferred, but there’s no annual fee and the rewards are halved. Still, 3 percent cash back on groceries and 2 percent cash back at gas stations and some department stores remains enticing.

Cash Rewards Visa Signature Card from Bank of America

If you spend at least $500 within the first 90 days of opening an account, you can qualify for online-exclusive $100 cash rewards bonus. You can also get up to 3 percent back on gas, 2 percent on groceries and 1 percent on everything else. Also, there is no annual fee. Cash-back rewards come in the form of a direct deposit in any checking or savings account, as a statement of credit or even as a payment towards a mortgage held by Bank of America. If you want your rewards to go back into a Bank of America account, you can receive an additional 10 percent bonus (this perk only applies to customers’ first $1,500 spend in each category, each quarter).

If you decide to buy a credit card that offers rewards, make sure you understand what you’re getting. Many people don’t quite get how rewards programs work. I’m one of them, which is why I found this article on MainStreet quite helpful. I will outline some of writer Nicholas Pell’s points regarding how to take full advantage of credit card rewards programs.

• Know that your plan is valuable: Don’t let points expire, and keep that from happening by understanding your plan. Plans may initially appear flexible, but can actually be limited concerning when and how you can cash in points.
• There are different kinds of points, and you can earn them in different ways: Pell interviewed Matthew Goldman, founder and CEO of Wallaby Financial, a company with an app to help you get the most out of your credit cards. This is what he had to say about points: “There are basically two kinds of points. The kinds where you earn one point and that’s it and another where there are bonus points.” Point systems with changing terms also exist, which is why you should sign up for notifications from you credit card company. “If a company changes its rewards program on a quarterly basis, there’s usually a whole new set of fine print involved,” Goldman said in the article.
• Know the caps and limitations of the program: In case of credit cards that offer rewards programs for grocery shopping, it’s important to look for words within the agreement like “select” and “limited.” For example, some grocery store rewards programs might only include specific grocery stores. Fast food restaurants are often left out of bonus programs for restaurants.
• Watch for red flags: Pell asked Randy Hopper, vice president of credit cards at Navy Federal Credit Union, about this part. Here are a few things that you should examine closely before deciding on a rewards program: 1) Earnings caps – be sure to look at your budget to check if it’s going to limit the amount of point you can collect, 2) Blackout dates – make sure these dates don’t correspond with the dates that you usually travel, if you travel frequently, 3) Airline limitations – branded airline cards will generally limit you to that specific airline, and that specific airline might not be the cheapest, 4) Points expiration, 5) Statement credit vs. cash back – cash back is just cash, whereas statement credit can only be spent on paying your credit card bill.

Some other words of advice from the experts: Redeem frequently, and concentrate all your points on the same card. In other words, don’t have 10 different rewards credit cards. That’s a good general rule for credit cards, anyway.

(O’Leary is a senior at the University of Missouri School of Journalism.)

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