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Merchant category codes: How they affect your credit card rewards
They categorize purchases and affect your rewards.
Merchant category codes are used to classify your purchases, and they have many practical applications for banks and businesses. For consumers, they’re most useful to determine rewards.
What are merchant category codes?
Merchant category codes (MCCs) are four-digit numbers assigned to businesses that accept credit cards. Used to categorize your purchases, they’re determined by the IRS and major US card networks: Visa, Mastercard, American Express and Discover.
Typically, each merchant has one MCC. If a merchant sells a variety of items, you can often make a good guess at its MCC based on its primary product or service.
MCCs aren’t assigned to individual purchases — they’re assigned to merchants. For example, if you buy a carton of milk and a bottle of aspirin from the grocery store, your purchases are likely to be categorized under one MCC: 5411 for grocery stores.
How to find merchant category codes
The IRS has a list of MCCs for a variety of categories, from hotels and department stores to veterinary services and general contractors. Credit card networks — Visa, Mastercard, Amex and Discover — largely follow the IRS’ conventions.
Visa has a convenient Supplier Locator tool that lets you type in addresses of merchants and see corresponding MCCs.
You may also find merchant categories by logging into your online credit card account and checking your transaction history.
How can merchant category codes affect your credit card rewards?
Merchant category codes are important because issuers use them to classify your spending. This is especially important when you’re trying to earn bonus rewards. If you spend at a certain retailer but its MCC doesn’t fall within your bonus categories, you won’t earn the bonus rewards you expect.
Buying grocery items at 7-Eleven, for example, doesn’t automatically earn you grocery rewards. Grocery stores and supermarkets usually receive the MCC 5411. Meanwhile, 7-Eleven stores often have the MCC 5541 — Gas stations, Fuel and Supplies. This means you’re likely to earn your card’s gas reward rate — not the one for groceries.
When the rewards matter to you, it’s a good idea to check how a merchant is classified before making your planned purchases.
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How to use merchant category codes to maximize credit card rewards
When it comes to maximizing your rewards, knowing MCCs is powerful. You can use a resource such as Visa’s Supplier Locator tool to look up merchants you plan to spend with. Once you have the MCC, you can select a card that offers bonus rewards for your spend categories.
If you don’t have a card with the right bonus categories, consider holding off on those purchases while you apply for the right card. For example, if you’re planning on booking a flight but you only have a card offering 1.5% cash back, you might want to get a travel credit card first.
There may be some purchases that don’t fall under common bonus categories — or those you don’t want to get new cards for. In these cases, it’s powerful to have a flat-rate-rewards credit card that offers the same rewards rate on all purchases.
What to watch out for when using a merchant category code
MCCs can be tricky, leading you to earn different rewards than you expected. Here are a few things to watch out for when using them:
- A store can have a different MCC than you think. Many stores fall under the MCCs you’d expect: Your favorite grocery store probably qualifies for bonus grocery rewards if your card offers them, and your hotel booking probably qualifies as a travel purchase. But there can be the odd merchant that surprises you. If you’re ever unsure, simply look up the MCC through the IRS or Visa’s Supplier Locator tool.
- A store can have various MCCs. If you’re shopping at a large merchant with many types of items or services, its various departments might have different MCCs. Look into these MCCs and see if they affect your rewards strategy.
- You’re usually out of luck if a merchant code is different than you expected. Card issuers usually don’t change reward categories after your purchases. However, you can try calling your issuer and asking them to give you the bonus rewards you thought you’d get, as the worst you can hear is “no.”
- Spend categories may include different MCCs. When defining bonus categories, issuers typically use catch-all terms like “travel” or “entertainment.” However, these categories may differ. There are many travel-related MCCs, so some merchants may not qualify, even when they seem like reasonable inclusions. Same goes for entertainment — one issuer might include amusement parks, while another might prefer to reward digital music instead.
- Your card issuer may not apply bonus rewards to certain merchants. When defining bonus categories, issuers typically use catch-all terms like “travel” or “entertainment.” However, these categories may differ. There are many travel-related MCCs, so some merchants may not qualify, even when they seem like reasonable inclusions. Same goes for entertainment — one issuer might include amusement parks, while another might prefer to reward digital music instead.
If you’ve ever wondered how issuers know which categories your purchases fall under, merchant category codes is the answer. Carefully consider MCCs when making purchases and pick the right rewards cards, as they could win you valuable rewards.
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