topic Re: Rewards question in Credit Cards

Rewards question

Anonymous — Wed, 04 Jun 2008 00:04:14 GMT

I know that credit cards give you rewards at rates based on categories. Does each credit card company get a detailed list of your transactions in order to do this? Or does it assume that if you went to BP you got automotive expenses?

I am curious - I could go to Kmart, and but auto expenses, food, clothing, etc...in other words many different categories. How does it work?

Thanks!

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 00:11:18 GMT

ace9848 wrote:

I know that credit cards give you rewards at rates based on categories. Does each credit card company get a detailed list of your transactions in order to do this? Or does it assume that if you went to BP you got automotive expenses?

I am curious - I could go to Kmart, and but auto expenses, food, clothing, etc...in other words many different categories. How does it work?

Thanks!

Categories for rewards cards are almost always determined by the category of the establishment, not the actual purchases. Purchases at big box stores like Kmart, Target, Walmart, and the like are not usually eligible for category-based rewards.

If the category eligible for the rewards is "gas stations," purchases at BP will count, whether you're buying gasoline or a cup of coffee. Some gas rewards cards only give bonus rewards on "gas purchases at the pump," in which case any purchases made inside the station (as opposed to at the pump itself) will not be eligible.

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 00:13:47 GMT

Thanks - the category for my discover card is "automotive". It seems that you are telling me that if I buy windshield wipers at BP, I will get the reward. If I buy them at KMART, I don't get the reward.

Is that correct?

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 00:18:22 GMT

ace9848 wrote:

Thanks - the category for my discover card is "automotive". It seems that you are telling me that if I buy windshield wipers at BP, I will get the reward. If I buy them at KMART, I don't get the reward.

Is that correct?

I'm not familiar with the way Discover cards in particular work, but in general, yes, that's the case. In fact, most of the time the T&Cs of category-based rewards cards tell you exactly what kinds of retailers don't count for bonus rewards. Big box stores, department stores, and wholesale clubs are almost always explicitly excluded.

What a nightmare it would be for the CCCs to drill down into your purchase and categorize every single item you buy. That's why they categorize on the merchant level, rather than individual items.

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 00:24:00 GMT

Ok. Do you know anything about Chase Freedom and the same situation? Thanks.

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 00:27:26 GMT

ace9848 wrote:

Ok. Do you know anything about Chase Freedom and the same situation? Thanks.

Yes, Chase Freedom uses the merchant category, and I believe there are only ten or so categories that are eligible for the bonus rewards, and of those, only your top three spending categories in any given month.

Message Edited by cheddar on 06-03-2008 05:27 PM

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 01:38:34 GMT

cheddar wrote:

ace9848 wrote:

Ok. Do you know anything about Chase Freedom and the same situation? Thanks.

Yes, Chase Freedom uses the merchant category, and I believe there are only ten or so categories that are eligible for the bonus rewards, and of those, only your top three spending categories in any given month.

Message Edited by cheddar on 06-03-2008 05:27 PM

It can get a little tricky with the merchant categories. If I purchase my monthly prescription at a drugstore, such as Walgreens or CVS, my Chase Freedom card rewards me with a 3% rebate. If I purchased that same prescription at Target or Walmart, I'd receive 1% cash back.

However, Chase Freedom is one of the few rewards cards that does include "Department Stores" as one of their ten top spending categories.

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 01:50:25 GMT

psychic wrote:

However, Chase Freedom is one of the few rewards cards that does include "Department Stores" as one of their ten top spending categories.

really? I should look into the Freedom card. You can get everything at walmart. If you order from walmart.com, does it count?

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 02:33:51 GMT

thrasher865 wrote:

psychic wrote:

However, Chase Freedom is one of the few rewards cards that does include "Department Stores" as one of their ten top spending categories.

really? I should look into the Freedom card. You can get everything at walmart. If you order from walmart.com, does it count?

According to the Chase Freedom website:

Department Stores

Includes both national and local stores.

I never receive any bonus points when I shop at Walmart. I think by "Department Stores," Chase means Macy's, Dillards,etc.

However, when you shop online through the "Chase Rewards Plus" program, you can earn an additional 2% back on your walmart.com purchases.

Message Edited by psychic on 06-03-2008 07:33 PM

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 04:51:18 GMT

Can they really tell if you "pay at the pump" or if you go inside? Isn't the charge still processed the same way from that retailer?

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 12:47:17 GMT

I don't think they're processed the same.

When you charge at the pump, they send a $1.00 charge through immediately to make sure your card won't be declined. This charge later changes to the amount of purchase. That right there tells you that pay at pump charges are handled differently.

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 13:27:03 GMT

thrasher865 wrote:

I don't think they're processed the same.

When you charge at the pump, they send a $1.00 charge through immediately to make sure your card won't be declined. This charge later changes to the amount of purchase. That right there tells you that pay at pump charges are handled differently.

That's right. Yes, they can tell if you pay at the pump, although I'm wondering where you're buying your gas that only puts through a preauthorization of $1.00. Every station around here puts through a hold of $100.

Message Edited by cheddar on 06-04-2008 06:27 AM

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 13:27:46 GMT

$100?!? Where do you live? Are you sure you're reading that charge correctly? You must live in an area with a high risk of drive-offs, lol.

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 13:29:40 GMT

thrasher865 wrote:

$100?!? Where do you live? Are you sure you're reading that charge correctly? You must live in an area with a high risk of drive-offs, lol.

Brooklyn, NY.

Yes, I'm reading it correctly. It happens every time. And yes, it's a high risk area (in many different ways).

Actually, I think $100 or so is pretty standard these days.

Message Edited by cheddar on 06-04-2008 06:29 AM

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 13:38:11 GMT

Well, since it never shows up on the statement, I guess it doesn't really matter what they charge. Here in East Tennessee, I'm still showin $1.00 on my online statement under pending charges. I would think Knoxville, TN would be worth more than $1.00 for drive-off assurance, lol. It's a pretty decent sized city.

I guess this is getting a tad off topic.....

Message Edited by thrasher865 on 06-04-2008 06:38 AM

Re: Rewards question

Anonymous — Wed, 04 Jun 2008 21:02:11 GMT

My local Chevron station here in Florida only puts through a preauthorization for $1.00. After inserting my card, I'm asked to enter my zip code.

According to MasterCard:

Preauthorization for Gasoline Purchases
When pre-paying at the pump with a credit card, some gas stations require a preauthorization amount to be processed. The preauthorization guarantees the gas merchant that the cardholder has the available credit to pay for the fuel that they will pump.

The preauthorization amounts are set by the merchant but can be $75 to $100 or more. At some gas stations the amount of the preauthorization is displayed on the pump’s digital display during the transaction.

While the preauthorization is not a charge made to the account, as long as it is in place, it factors into the calculation of the credit available on that account. For example, if a credit card has a $600 spending limit and an individual has spent $400 on their card, if the gas station processes a $75 preauthorization amount, and then the cardholder purchases $25 worth of gas, the card will have a $100 balance (the difference between $600 and $500) available until the preauthorization is removed (and presuming no other purchases are made).

Depending on the bank or institution that issued the credit card, it can take up to a few days for the preauthorization amount to be removed.

This preauthorization process is necessary to protect the merchant from significant fraud and loss (and resulting costs to the payment system) in cases where an individual pumps an amount of gas but does not have the credit available on their card to pay for it.

Similar preauthorization processes exist for some other large purchase transactions, including hotel bookings and car rentals.