What Counts as a Travel Purchase for Rewards Credit Cards?

How Merchant Category Codes Work

Here's how the classification system works: If a business wants to accept credit cards, it must first put a payment system in place with a credit card payment network. It is then assigned a merchant category code (MCC) based on what it sells or the service it provides.

The card issuer can set up bonus categories, which might include groceries, gas or dining, for example.

Credit card issuers frequently use the merchant category codes to determine which purchases are eligible for bonus points or miles. They might, for example, offer three or five times the miles for travel purchases.

Your card issuer decides which merchant category codes it will accept as "travel." Card issuers do not have identical category codes that qualify as travel. The result is a purchase could be counted as travel by one issuer but not by another.

What Generally Counts as a Travel Purchase

Much of what counts as travel purchases is intuitive (and applies to virtually all credit cards). Among the eligible purchases for most travel rewards are:

• Airline reservations
• Hotel reservations
• Passenger train tickets
• Bus tickets
• Car rentals from approved companies
• Limousine services
• Cruise line reservations

Beyond that, it can vary. Some issuers are more limited than others in which merchant classification code they will accept as a travel purchase. While most accept campground and timeshare fees, for example, not all do.

However, it's important to note that if you buy through a third party, purchases may not count as travel. The same is true if you use points to buy through your credit card portal. It's also possible that you won't qualify for elevated rewards if your purchase was part of a package. Check the fine print of your credit card agreement, go online or call your credit card issuer to be sure.

Credit card terms state clearly that whether a purchase is eligible as a travel purchase depends on its merchant category code, and that credit card issuers do not assign them.

What Generally Does Not Count as a Travel Purchase

Other travel expenses that typically won't count as travel include gasoline, in-flight purchases and duty-free purchases at the airport.

Some purchases bought during a cruise or train trip may not count either—shore excursions, sightseeing tours and casino purchases, for example. Again, that's because the merchant classification code is not among the one the card issuer considers travel. Also not generally included are truck, RV and boat rentals.

If you buy travel insurance, that is not eligible for travel rewards, though some credit cards include travel insurance if you use the card to make a reservation.

How to Maximize Travel Rewards

You can maximize credit rewards by planning ahead. If, for example, you prefer a certain airline, it may make sense to take a look at their co-branded credit cards to see which makes the most sense for you. The same is true of hotels. The downside is those cards may lock you into a certain airline or hotel.

Other cards offer more flexible rewards. Knowing how you plan to use your travel rewards credit card, and which benefits are most important to you, can help you choose. If you don't yet have a travel rewards card, also look at which cards are offering introductory bonuses. You'll also want to check on how the rewards (and their potential values) compare. A much broader category with a smaller reward might not be worth it.

Other tips:

• Make your reservations through the credit card rewards portal. You'll typically be able to buy more with fewer points or miles.
• Use your credit card (and pay it off in full). There's likely no purchase you can make that won't earn you any points or miles. Even if you are not eligible for bonus rewards, you're eligible for something.
• Sign up for airline miles or hotel programs when you or a family member flies. It's typically free, and those miles or hotel status may come in handy later.

The Bottom Line

Matching a travel rewards card to the kind of traveling you are hoping to do can result in significant savings, but sometimes the fine print on what is eligible for bigger rewards can be confusing. Credit card issuers base decisions on which purchases qualify on the merchant classification code of the business you purchased from.

Juicing up rewards by using the right card for the right category can result in accumulating points or miles more quickly.

If you're looking for the right travel rewards card, consider what sort of travel you anticipate as well as introductory bonuses and whether you are willing to pay a fee.