Capital One Walmart Rewards® Mastercard® review: Best no annual fee grocery rewards card?

For fans of online shopping and Walmart stores, the Capital One Walmart Rewards® Mastercard® could be one of the best credit cards for groceries.

Boasting no annual fee, it offers an impressive 5 percent cash back on Walmart.com purchases, including grocery pickup and delivery orders. The card also earns 2 percent cash back for in-store purchases, which is double the amount offered by other cash back credit cards. And since this is an instant-use credit card, you can begin racking up high rewards with the big-box retailer within minutes of approval.

As long as you take advantage of the card’s high-earning potential and pay your balances in full and on time, the Walmart Rewards Mastercard is a solid pick. But if you prefer to shop elsewhere, a flexible rewards credit card that earns bonus cash back at a variety of stores will provide greater value.

Quick highlights

• Rewards rate: 5 percent cash back at Walmart.com, including pickup & delivery; 2 percent cash back in Walmart stores & fuel stations, at restaurants and on travel; 1 percent cash back everywhere else Mastercard is accepted
• Welcome offer: Earn 5 percent cash back in Walmart stores for the first 12 months when you use your Capital One Walmart Rewards Card with Walmart Pay
• Annual fee: $0
• Regular APR: 17.99 percent or 29.49 percent (variable)

Current sign-up bonus

Instead of a flat cash back bonus, the Walmart Rewards Card currently offers an elevated cash back rate in your first year: You can earn 5 percent cash back in Walmart stores for the first 12 months when you use your card with Walmart Pay. That’s 3 percent higher than the regular rewards rate you’d get when shopping in-store at Walmart.

To get access to the extra cash back, you’ll need to sign up for Walmart Pay, the store’s digital wallet, and use it exclusively at checkout. If you were to use the card at Walmart without the Walmart Pay app, you’d only earn 2 percent back.

If you do the majority of your shopping at Walmart across categories including groceries, clothes and car maintenance, you could earn a significant amount of cash back in the first year. Based on average household spending estimates from the U.S. Bureau of Labor Statistics, using the Walmart Rewards Card with Walmart Pay for these purchases in your first year could earn you close to $400 in cash back.

Rewards rate

The Capital One Walmart Rewards Card offers good everyday value for loyal shoppers. All the points you earn, even the 1 percent cash back on all other eligible purchases made outside of Walmart can be used to effectively write off future purchases.

How you earn

Cardholders earn an unlimited 5 percent cash back at Walmart.com, including grocery orders made for in-store pickup or local delivery. This is especially useful since Walmart typically doesn’t count as a grocery store, according to most credit card merchant category codes.

The unlimited 5 percent rate for a card that charges no annual fee is impressive, especially since it almost rivals that of top U.S. supermarket rewards cards. This includes the Blue Cash Preferred® Card from American Express, which offers a slightly higher rate of 6 percent but carries an ongoing annual fee of $95 ($0 intro annual fee for the first year) and a spending cap of $6,000 per year on grocery purchases.

On purchases made at Walmart stores, you’ll earn an ongoing regular rewards rate of 2 percent cash back, whether or not you use Walmart Pay. Combined with Walmart’s everyday low prices, this is still a good deal, considering most other rewards credit cards only offer 1 percent cash back for shopping at superstores like Walmart and Target.

On top of the grocery rewards, you also earn 2 percent cash back at restaurants, on travel and for purchases made at Walmart and Murphy USA gas stations. Everywhere else Mastercard credit cards are accepted, including at Sam’s Club stores and all other gas stations, you’ll earn 1 percent cash back. These are nice add-ons that help give the Walmart Rewards card more value, but you’ll definitely want to look at different options if you spend a lot in the following areas:

• Gas
• Travel
• Dining

How to redeem

There are multiple ways to redeem your cash back, but the most common way to use your Walmart rewards is as a statement credit to cover purchases made with the card. While rewards can only be applied to purchases made in the last 90 days, partial redemptions are an option. After selecting the purchase and the amount of cash back you want to redeem, the charges will disappear in two to three business days.

You can also request a check for your cash back balance or redeem for gift cards at Walmart or other retailers. Rewards can also be used for travel reservations, including flights. The number of points will vary based on the requested trip, and reservations must be booked 72 hours in advance.

The Capital One Walmart Rewards Card is a fairly straightforward cash back credit card. The biggest advantages to carrying the card are convenience and value.

You can earn high rewards from the comfort of your home, ordering groceries and anything else that Walmart is known to carry, and then picking them up curbside at your store or having them delivered to you.

Some stores charge more for the privilege of online ordering, adding on pickup fees or adding a markup percentage to items to cover the cost of shopping for you or delivering to you. But Walmart states its online prices are the same as what you’ll find in the store. So you won’t have to spend more or lose any of your rewards to additional fees.

Other than that, the Walmart Rewards card has a small handful of standard features like zero fraud liability but lacks many of the standout, cost-saving perks typically found with Capital One credit cards, like extended warranty, purchase protection and rental car insurance. Here’s a look at the top features that come with the Walmart Rewards card.

Instant use

Once you’re approved for the Walmart credit card, you won’t have to wait a week or longer for your card to arrive in the mail before you can start earning rewards. This is an instant-use credit card, so you’ll get an instant card number via the Walmart app that can be used immediately.

No penalty APR

If you’ve ever made a late payment and gotten stuck with a penalty APR, you know how difficult it can be to pay off your credit cards while dealing with increased interest rates.

With the Walmart Rewards card, a late payment won’t cause your interest rate to go up. According to the terms and conditions, your purchase APR will only change if the market conditions change. If you tend to carry a credit card balance, this is a useful feature that can give you some peace of mind that you won’t have to give up even more of your money to higher interest rates if you are late with your payments.

Card lock for missing or stolen cards

Should your card get lost or stolen, you won’t need to call Capital One for help. Through their smartphone app, you can lock missing cards immediately, and even request a new one.

Whether you use your rewards for cash back, a check, gift cards or travel, points are worth one cent apiece. When covering purchases and requesting a check, you can choose how many points you want to redeem for cash back. For gift cards and travel rewards, you must have enough points to cover the full redemption cost.

The Capital One Walmart Rewards Card is designed for consumers with fair credit or good credit (a FICO credit score of 580 to 740). Account holders will be charged a variable APR rate of 17.99 percent or 29.49 percent on new purchases and balance transfers, based on creditworthiness. This is similar to the APR found with most Capital One credit cards open to people with fair-to-good credit. But even the low end of this range is higher than the current average credit card interest rate.

For balance transfer fee: $0 at the transfer APR. However, if you decide to make a balance transfer during a promotional offer (none currently available), you may be charged a fee of 3 percent of the balance transfer. All cash advances are charged a variable APR rate of 29.49 percent, along with a 3% cash advance fee (not less than $3).

Although your interest rate won’t go up if you make a late payment on the Capital One Walmart Rewards Card, you will be charged a late fee. The penalty for missing the due date is up to $39.

On the plus side, the card charges no annual fee and no foreign transaction fee, so as long as you pay off your balance on time and in full each month, it should cost you nothing to hold this card.

Compared to other cash back credit cards, the Capital One Walmart Rewards Card is the clear winner, but only if Walmart is your go-to place to shop. If you’re looking for more versatility, here are two other cash back credit cards that will reward you for purchases made at traditional supermarkets.

Capital One Walmart Rewards Mastercard vs. Blue Cash Preferred® Card from American Express

The Blue Cash Preferred card offers a whopping 6 percent cash back on up to $6,000 in purchases made at U.S. supermarkets. It excludes superstores like Walmart and warehouse stores like BJ’s or Sam’s Club but is still more versatile than the Walmart Rewards card since it gives you greater flexibility to choose where you shop for groceries. The card also gives you plenty of chances to earn cash back in popular household categories like gas, transit and select streaming services.

The Blue Cash Preferred does carry an annual fee of $95 ($0 intro annual fee for the first year). But even if you’re shopping at a store that doesn’t have the lowest prices, such a high rate of cash back from your Amex card could go a long way to matching the deals and discounts you’d find shopping at Walmart. And if you add in a cash back app to help you find the best grocery deals, the Blue Cash Preferred could easily offset its annual fee and outdistance the money you’d save shopping at Walmart.

Capital One Walmart Rewards Mastercard vs. Citi Custom Cash℠ Card

If you want a versatile card that earns grocery rewards at a number of different places but aren’t interested in paying an annual fee, the Citi Custom Cash Card is a great choice. This easy-to-use rewards card earns 5 percent cash back on your highest eligible spending category (up to $500 each billing cycle), which includes options like gas or groceries. So you can set this card up as your go-to grocery card and use it when shopping at your favorite supermarkets. This is a great fit for smaller households that won’t have any problem staying under the monthly spending cap.

Best cards to pair with this card

If you value cash back above all other rewards, it makes sense to pair the Capital One Walmart Rewards Card with a flat-rate cash back card or another cash back card that offers rewards in different bonus categories. For example, the Chase Freedom Flex℠ also comes with no annual fee while offering rewards for spending in a wide variety of rotating categories throughout the year.

To cover general purchases that don’t fall into the Walmart card’s bonus categories, the Citi® Double Cash Card would be a great option thanks to its flat cash back rate of up to 2 percent back on every purchase you make (1 percent when you buy, 1 percent when you pay off your purchase).

For many, Walmart is more than a retailer—it’s the primary hub for groceries, home goods, auto care and more. There are over 5,300 Walmart stores in the U.S., which makes this card offer very appealing. With unlimited 5 percent cash back on purchases at Walmart.com, which includes grocery pickup and delivery, there’s a lot of upside for those who do all their shopping at the superstore.

However, if you prefer shopping at a variety of stores or do not live close to a Walmart, getting the card may not be worthwhile. Instead, consider adding a card to your wallet that offers rewards in broader categories that match your spending habits.

The information about the Chase Freedom Flex℠ and the Capital One Walmart Rewards Mastercard have been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.