Do Credit Card Category Bonuses Apply to Overseas Purchases?
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TPG reader Steven sent me a message on Facebook to ask about earning rewards while traveling internationally:
“Does the Chase Freedom 5x bonus work at international locations? Could I earn bonus points this quarter at, say, a drug store in Australia?”
Credit card bonus categories are the bread and butter of award travel. By using the right card for each purchase, you can earn rewards more quickly and maximize the return you get on all your spending. The key is knowing which cards offer bonuses, when those bonuses apply and when they don’t.
The Chase Freedom card comes with a lucrative bonus structure, offering 5 points per dollar in rotating categories on up to $1,500 in purchases each quarter. The bonus for this quarter — available from October 1 to December 31, 2016 — applies to wholesale clubs, department stores and drug stores. There’s nothing in the terms and conditions that limits qualifying purchases to the US, so other than a few stores that are specifically excluded, you should be able to earn the 5x bonus anywhere that uses one of the eligible merchant category codes.
That said, there are a few reasons why using the Chase Freedom abroad might not be the best idea. For starters, you’ll get hit with a 3% foreign transaction fee, which puts a huge dent in your overall return. Depending on how highly you value Ultimate Rewards points, you might decide that fee is worth paying, but I think you’re better off using one of the many cards that don’t charge foreign transaction fees.
Another potential problem is that category codes can be unpredictable overseas, especially when doing business with smaller merchants. If your takeout meal ends up being categorized as a grocery store, then you won’t get any benefit from using a card that earns a bonus for dining and restaurant purchases. That could mean earning just 1 point per dollar rather than 5, which is a costly difference if you’re also paying a foreign transaction fee.
There are some category bonuses that only apply to domestic purchases. For example, the Amex EveryDay Preferred Credit Card earns 3 points per dollar at US supermarkets and 2 points per dollar at US gas stations, but doesn’t earn a bonus for similar purchases made outside of the country. As always, make sure you know the rules associated with your card’s bonus structure to avoid any unpleasant surprises.
For more on maximizing bonus categories and Ultimate Rewards points, check out these posts:
- How Credit Card Issuers Classify Travel and Dining Purchases
- When Using the Right Rewards Card is the Wrong Choice
- Why Chase Sapphire Preferred and Freedom Unlimited are the Perfect Beginner Combo
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