What Can You Expect From Dining Credit Cards?
Here’s what you should know about dining credit cards:
Rewards earning: All of the dining cards surveyed earn at least two points per dollar or 2% cash back on grocery store purchases. More than a quarter of the cards surveyed earn at least five points per dollar or 5% cash back on dining purchases.
Sign-up bonus value: You can earn a sign-up bonus of at least $150 with 84% of dining credit cards.
Annual fee: About 80% of dining cards charge an annual fee. You’ll pay an annual fee of $100 or more with 21% of dining cards.
How Can You Earn and Redeem Rewards With Dining Credit Cards?
Americans are dining out more than ever before. The average consumer spent about $3,400 on food away from home in 2017, according to the Bureau of Labor Statistics’ Consumer Expenditure Survey. That expense, a nearly 7% increase from 2016, can produce rewards with the right credit card.
For the typical consumer, a dining rewards credit card that earns at least four points per dollar could bring in about $135 annually in rewards just from restaurant purchases. But dining cards most commonly earn two points per dollar, offering an annual rewards value closer to $70.
Often, dining rewards credit cards reap bonus rewards for more than just meals out. For example, Chase Sapphire Preferred Card pulls in five points per dollar on Lyft rides (valid through March 2022), 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
Unlike travel cards, which typically earn and redeem travel rewards at the highest value, dining cards may offer the best value when rewards are redeemed for options other than dining. The bonus rewards you receive for dining with a Hilton Honors American Express Card are best used for free nights at Hilton hotels. With a Chase Sapphire Preferred Card – which earns two points per dollar on dining and travel – points are best redeemed as travel booked through the Chase Ultimate Rewards portal.
Some dining cards yield a respectable redemption value in dining. For example, the American Express Gold Card earns its highest rewards value – four points per dollar – at restaurants. Points can be redeemed at their full value for gift cards, including restaurant gift cards. And you can redeem cash to pay for restaurant purchases with cash back dining cards.
How Much Is a Dining Card Worth to You?
Certain dining cards don’t make sense for everyone. Essential expenses, such as groceries or household bills, may be more consistent credit card purchases than restaurant meals, which can be a luxury.
If a dining card has an annual fee, you might not spend enough on meals out to make it worth carrying. When considering a dining rewards credit card, compare how much you can amass in rewards each year with any annual fee that applies.
Cardholder benefits might sweeten the deal. For example, the American Express Gold Card has a $250 annual fee. If you only use it for dining, the card requires spending about $6,250 each year at restaurants to score enough rewards to offset this fee. But the card also offers up to $10 in monthly statement credits, or $120 annually, at participating restaurants.
Even if you only spend about $3,400 on dining each year, you could realize an annual value of more than $250 in rewards and benefits from this card if you take advantage of the credits.
If eating at restaurants isn’t a routine expense for your household, a dining card with no annual fee might be a good choice. You can use it to earn 3% back at restaurants, but you don’t need to worry about getting enough rewards to make up for an annual fee.
“Think about how hard you’re willing to work at maximizing that credit card,” recommends Jim Miller, vice president of banking and credit cards at J.D. Power.
A dining card isn’t always practical for everyday use, so you might want to add another card to your wallet. If you already have at least one card, consider the consequences of opening a new line of credit.
Every new card you apply for puts a hard credit inquiry on your credit report, which can leave a small but temporary ding on your credit score. A new account can drag down the average age of your accounts, and it can change your credit utilization ratio, all of which can affect your credit score.
And don’t forget that a new credit card means managing another credit card account, which includes tracking your spending, checking your statement and paying your bill each month.
How Can You Choose a Dining Credit Card?
If you’re selecting a credit card just for dining rewards, look for one that provides more value than you can extract from an everyday card. Usually, that means a card that delivers at least three points per dollar on dining.
Some cards may offer more value in redemption. For example, the Chase Sapphire Preferred Card pulls in two points per dollar on restaurant purchases, but you can redeem your points for 25% more value on travel booked through Chase Ultimate Rewards.
Some dining cards are fairly evenly matched in dining rewards, sign-up bonuses and fees. Your choice could come down to which one can produce additional value in other spending categories, such as entertainment, travel and groceries.
Erik Paquet, editor-in-chief of rewards management service AwardWallet, encourages consumers to consider: “Does the card earn more than one point per dollar on other types of purchases that are a significant part of your budget?”
Maximizing Dining Rewards
Dining cards make earning rewards simple when you use points for purchases at restaurants, but pay attention to the fine print to make the most of your rewards.
Make sure that the dining rewards you expect are the dining rewards you receive. Also, credit card issuers may vary in what they consider a restaurant for earning rewards. Some issuers specifically offer rewards on food delivery, but not all do.
“Each bank has slightly different rules about which merchants fall into the dining and restaurant bonus category,” Paquet says.
Credit card issuers rely on coding to indicate which merchants are restaurants, and each one has exceptions. For example, restaurants within sports stadiums or hotels may not match up for earning bonus dining rewards.
Coding can be helpful in expanding where you might rack up dining rewards. For instance, fast food restaurants, even food trucks, are likely to code as dining.