Q: I want a credit card that gives cash back or rewards for medical expenses, groceries and gasoline
Most rewards cards pay at least 1 percent for all eligible purchases, including medical expenses. But the other two categories you mentioned -- gas and groceries -- have spawned major competition among lenders for a space in your wallet. But to your first point:Rewards for medical expenses?
According to personal finance author Carmen Wong Ulrich, paying for medical expenses with a rewards credit card could cost you more than you think. In her book, "The Real Cost of Living," she notes that many hospitals would prefer that you sign up for a medical credit card (for which they receive kickbacks) or that you pay in cash.
Our advice: Avoid the expensive medical credit card, and leverage a cash payment to negotiate a few percentage points from your bill instead. If you're paying for medical expenses with a credit card because you don't have the cash, a "plain vanilla" credit card with a low APR will save you far more in finance charges than you'd earn back from a typical rewards card.Gas and groceries
Gas and groceries, however, are another story. Credit card issuers have discovered that consumers love saving extra money at the checkout counter and at the pump. Even as gas station owners and grocery chains lobby for lower merchant fees, they can't stop their customers' demand to pay with plastic. Lenders fan those flames by saving some of their best cash back rewards for those purchasing categories. Some of the best credit card offers for rewards on gas and groceries for offers in both rotating categories or in everyday purchases include:
- Blue Cash Preferred® Card from American Express.
- PenFed Platinum Cash Rewards Visa® Card.
- Chase Freedom®.
Estimate how much you'll save by calculating your monthly grocery and gas budgets. Then factor in your rewards card's annual fee, and the finance charges you'll pay if you have to let a balance ride for longer than a few weeks. The most generous cash back card might not always lead you to the largest annual rebate.