Merchant category codes: How to earn more cash back

Digging into the inner workings of your credit card rewards might sound intimidating, but the extra elbow grease is worth it. For instance, exploring your card terms will reveal that you earn cash back based on the business’ merchant category code — or MCC.

This hidden knowledge can help you learn what makes your rewards program tick. Read on for the ins and outs of MCCs — and how to earn maximum cash back with your cash back credit card.

What is a merchant category code?

Merchant category codes are four-digit numbers that credit card networks — like Visa, Mastercard, American Express and Discover — mainly use to classify businesses in order to track consumer spending. They collect this information to protect you from fraud, assign rewards and gather marketing data that fine-tune their products.

On the flip side, you can look up your network’s merchant category code list to see which retailers may earn you cash back according to your card’s bonus categories before you shop.

It’s important to remember that each network has its own specific merchant category code list and definitions for which purchases or retailers count.

Why didn’t I earn cash back on a purchase at a certain store?

This boils down to two things: your rewards card’s bonus category definition and your network’s MCC classification.

Some credit cards have broader category definitions. For instance, the Chase Freedom Flex℠* occasionally offers online shopping rewards on Amazon.com, Walmart and PayPal purchases, based on its quarterly cash back calendar.

Meanwhile, the Bank of America® Customized Cash Rewards credit card has an in-depth online shopping category that covers major retailers like Amazon.com, Walmart.com and Target.com, all the way up to specialty merchants like Etsy.com.

If it wasn’t the fault of a limited bonus category, the MCC might not have lined up. Two common examples of this tend to be superstores like Walmart and store-branded gas like Costco fuel stations. Although Walmart is the largest U.S. grocery product retailer according to the USDA, standard Walmart locations are listed as MCC 5310 — or discount stores — while Walmart Supercenters are usually listed under Visa’s MCC 5411 — grocery stores and supermarkets.

Similarly, many Costco fuel locations are listed as MCC 5542 — automated fuel dispensers — instead of MCC 5541 (like most traditional gas stations), and bonus category descriptions can void rewards on these purchases, too.

These annoying MCC differences develop because the store’s merchant category code is determined by its primary products — or whatever it makes the most money from. Since Walmart doesn’t primarily sell supermarket produce, its MCC reflects that.

How to find a merchant category code

Finding a business’ merchant category code can be tricky depending on your network. Visa merchant category codes are generally easy to find since it’s the largest network. A quick Mastercard merchant category code lookup will also find you a list of Mastercard MCCs pretty easily.

However, some networks like American Express and Discover don’t make their code lists publicly available. In that case, your card issuer may provide a list of its network’s MCCs either online or by request, if you contact them.

It might take some trial and error to nail down which stores near you offer the best rewards otherwise. You can try making a small purchase on your card at the store you want to shop and check back on your next statement to see how much you earned in rewards.

Earning cash back with merchant category codes

Earning cash back with MCCs starts with taking the initiative to look up the merchants you shop most frequently with — or partner retailers that carry special offers with your card issuer. (Keep in mind that merchant brands have their own MCC, especially when it comes to travel chains.)

To help you get started with maximizing your cash back, we’ve collected a list of common bonus categories, Visa and Mastercard merchant category codes. They can be largely similar but differ in a few key areas.

In the end, it is at the discretion of your card issuer which MCCs they will lump into your bonus category. Not all cards with a travel bonus will consider passenger railways, for instance.

How to maximize your cash back with merchant category codes

Now that you have a general understanding of bonus category codes, here are a few strategies to align your spending and maximize your rewards card’s cash back categories.

Know your favorite stores’ merchant category codes

The first step to optimizing your spending is to take the time to collect the MCCs of stores you frequently shop at. Investing a little bit of time into finding the store that rewards you the most can deliver an excellent return with cash back.

During the process, you might find that some stores in the same chain may have different MCCs, depending on their primary inventory. Even different counters or sections in the same department store may carry different MCCs. You can use this to your advantage if you know one location near you will provide a better cash back rate than the other.

Try to keep your shopping within your best cash back category

It may take some extra work, but try to align most of your shopping — or at least big-ticket items — related to the category that you earn the most cash back within.

The Blue Cash Preferred® Card from American Express, for instance, earns 6 percent cash back on U.S. supermarket purchases (up to $6,000 per year, then 1 percent), but you can use that to essentially earn 6 percent cash back at other retailers if your supermarket allows you to purchase gift cards with your credit card.

Get creative with your shopping

As mentioned, some store locations will have different MCCs than the others in the same chain, or even another unexpected MCC classification. These “loopholes” can provide great opportunities to reap cash back on purchases that typically wouldn’t earn rewards.

If you frequently visit drug stores, for example, some Kmart locations are labeled with MCC 5912, or drug store and pharmacies. This means the Chase Freedom Flex may earn 3 percent cash back on what would normally be considered a department store purchase — simply check your rewards statement later to see if your creativity was rewarded or if the “loophole” was closed.

The bottom line

Panning your card’s terms for gold nuggets like merchant category code (MCC) classifications might sound overwhelming if you hate legalese, but these valuable specifications can be worth their weight in cash back opportunities.

Once you understand your favorite stores’ MCCs, you can optimize your shopping list for cash back on purchases that normally wouldn’t earn anything. That is, as long as you’re willing to put in a little more elbow grease and creativity.

*Information about the Chase Freedom Flex℠ has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.