How Merchant Categories Affect Your Credit Card Rewards

Credit card reward schemes are a terrific way to optimize your spending, but not all transactions are rewarded the same. The benefits you earn are mainly dependent on the merchant category in which your purchases fall. Understanding merchant categories can help Indian shoppers maximize their rewards and make more informed purchasing decisions.

What are Merchant Categories

Credit card networks such as Visa, MasterCard, and RuPay classify businesses into merchant categories. These classifications, known as Merchant Category Codes (MCCs), assist banks in determining the type of business where you're spending. For example, an MCC for a grocery store is different than one for a hotel or a restaurant.

In India, certain MCCs are linked to greater reward rates based on your credit card. For example, buying at department stores or dining at high-end restaurants may earn more reward points than paying utility bills.

Maximize Rewards by Matching Merchant Categories with the Right Cards

Indian credit cards offer category-specific benefits. For example:

• HDFC Diners Club Cards provide greater benefits for eating, travel, and online shopping.
• The Amazon Pay ICICI Card offers cashback on purchases made on Amazon.

Understanding your credit card's reward structure allows you to optimize your spending to the categories that provide the most value.

Identify Daily Spend Categories

Categories like grocery, e-commerce shopping, eating, and travel frequently offer accelerated benefits. Cards like HDFC Swiggy offer bonus points for food and grocery purchases. If these categories match your regular shopping habits, you can receive large incentives over time.

Knowing the Exclusions

While some categories give accelerated rewards, there are also some categories that don’t give you any benefits at all, such as rent and wallet recharge. You should be aware of your card’s terms and conditions regarding these matters.

Track Your Spending

Many banks and credit card companies in India have apps that allow you to track your spending and reward points across multiple categories. Apps like HDFC SmartHub and SBI YONO provide precise information about spending and rewards. Apps like SaveSage Club cover all your cards across all banks and provide information related to your rewards points and how you can maximize them.