The points and cash back you earn from your rewards credit cards can add up quickly – especially when you maximize your category spending. Many of the best credit cards in Canada offer extra rewards earnings when you make purchases within certain categories. For example, the Scotia Momentum Visa Infinite offers 4% cash back when you use your credit card at gas stations and grocery stores.
Understanding Merchant Category Codes
To get the most out of your rewards credit card, it is important to know how credit card companies track and classify your spending. Every store that accepts credit cards has what is known as a Merchant Category Code (MCC). The MCC is used to help credit card companies determine whether or not you are eligible for extra earnings on your purchases. What this means is that when it comes down to category spending, the rewards you earn is dependent on where you buy, not what you buy.
Let’s assume you have a credit card that earns you 2% cash back on groceries and 1% on all other purchases. You may earn 2% cash back when you buy milk at the grocery store, but only get 1% cash back when you buy milk at a convenience store. Although you are buying the same item (and it’s a grocery item), the MCC for each store is different. For example, in Ontario, most Loblaw’s have an MCC of 5411 which classifies it as a grocer. Mac’s, on the other hand, may have an MCC of 5499 which classifies it as a convenience store. So you only receive the 2% cash back for making purchases at an actual grocery store and not when buying grocery items at a convenience store. To see our list of Canada’s top 5 cash back credit cards and their rewards click here.
Maximizing Your Category Earnings
In order to get the most out of your credit card, you need to know where to shop. The key is to find the MCC, which tells you exactly which category a merchant fall under. This may be tricky for stores such as Walmart, which could be categorized as a grocer, retailer or even a discount wholesaler. To know for sure which category a merchant falls under, you should carefully review your credit card statement and check your previous transaction history for the MCCs of the stores you have visited.
Here are some resources to help you decipher those merchant category codes:
- The Merchant Category Codes (PDF) and their corresponding categories can be found here. Cross-reference it with your credit card statements, to figure out which categories your favourite stores fall under.
- The Popular Merchants (list) was put together by Scotiabank and outlines how much cash back you would earn at each of the stores on the list. (Note that Walmart didn’t even make the cut, which means you’d earn just 1% cash back there.)
By arming yourself with this information, you can maximize your returns and even find the perfect combination of rewards credit cards for you. If you find that the Popular Merchants list above includes many of the places you shop, we would recommend checking out the Scotia Momentum Visa Infinite. Here’s a look at the highlights offered by this card: