How to Get the Most Credit Card Reward at Wal-Mart?

Dear Cashing In,

I'm a mom with three kids, and I have a Target credit card, which I love. It gives me 5 percent back at Target and free shipping. But I also do a lot of shopping at Wal-Mart. What's the best rewards card for shopping there? And if I buy groceries, will it count as a supermarket or a different kind of store?

- Discount Debbie

Dear Discount Debbie,As far as retail cards go, Target's Redcard is one of the most generous: 5 percent off all purchases, with no limit, applied right at the checkout counter -- not a rebate that shows up on a later statement. You pay no annual fee, plus, as you note, you get free shipping on online orders.

It's also worth mentioning in the wake of this month's news about the credit card security breach at Target that the company says it has fixed its security issues and that it is safe to shop there with credit cards.

Many retail credit cards, such as those from department stores, have a more complex rewards structure that might include a mix of coupons after a certain amount of purchases at the store, big discounts on the day you sign up for the card and targeted promotions. Those can make sense for regular customers of those stores.

As for Wal-Mart, it's worth examining the cards that store offers in conjunction with a bank. The Wal-Mart Discover card and the Wal-Mart Credit Card both allow you to save 5 cents a gallon at Wal-Mart gas stations and receive a monthly credit score, with no annual fee for the card. The Discover card also earns you 1 percent cash back on purchases. I would not categorize these as must-have cards for Wal-Mart shopping, but they could make sense for people with average credit scores who cannot obtain a more lucrative rewards card.

A better choice for Wal-Mart shopping might be a garden-variety cash-back card. Many such cards start with 1 percent cash back on all purchases, with bonuses for spending in specific categories. To get the most from Wal-Mart purchases, you'll want to find a card that offers bonuses for Wal-Mart expenditures.

As you note, the key question is: What is Wal-Mart? Is it a discount store, a grocery store or something else? The answer is: It depends. Card companies use what are known as merchant category codes (MCC) to classify transactions from different retailers. There are ways to find out these codes before you make a purchase. Look at Visa's interactive supplier locator and you'll see how Visa classifies different merchants that accept its cards. Generally, Wal-Mart Supercenters are classified as MCC No. 5411, "Grocery stores/supermarkets/bakeries," while standard Wal-Marts (without groceries) are classified as 5310, "discount stores/warehouse/wholesale."

If you're shopping at Wal-Mart Supercenters, you might consider one of these cards:

The PenFed Platinum Rewards Visa (no annual fee), which normally offers 2 points per $1 spent at supermarkets and 3 points per $1 spent at gas stations. From now until April 4, 2014, it will give you 3 points per $1 at supermarkets and 5 points per $1 at gas stations. All other purchases always earn 1 point per $1.
The BankAmericard Privileges Visa ($75 annual fee, waived the first year), which offers 2 percent cash back on groceries and 3 percent on gas (capped at $1,500 in combined gas and grocery purchases a quarter), plus 1 percent on all else.

Note that another card good for grocery shopping, the American Express Blue Cash Preferred card ($75 annual fee), offers 6 percent cash back at supermarkets. But it explicitly excludes superstores and warehouse clubs from that bonus.

If you're shopping at standard Wal-Marts, take a look at cards that offer bonuses on spending at discount stores, such as the FifthThird Bank Visa Signature card (no annual fee), which offers double points at those stores. This card also gives double points at grocery stores and gas stations, so it will offer a bonus no matter what kind of Wal-Mart you frequent.