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Rotating bonus category credit cards typically offer bonus cash back on purchases that fall into certain categories, which change quarterly. For example, a credit card might offer 5% cash back on office supplies, gasoline or groceries for three months. Categories change, and cardholders typically need to activate the new bonus categories every quarter.
If you're going to enjoy the sport of maximizing your rewards, and you love cash back rewards, this could be a fun way to earn extra rewards.
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How Quarterly Rotating Bonus Categories Work
Rotating bonus category credit cards typically offer 5% cash back on eligible bonus category purchases in a quarter, up to a maximum that's typically $1,500 in combined spending. Any spending above that amount will usually earn 1% cash back. You need to activate the bonus categories every quarter to benefit from the higher rewards rate.
Common bonus categories include:
- Gas stations
- Grocery stores
- Restaurants
- Streaming services
- Home improvement stores
- Digital wallets
- Popular retailers
Here's an example of how you can maximize rewards with rotating bonus categories: Let's say the first quarter's bonus categories are gas stations and grocery stores. If you spend a combined $1,800 at both, you can expect to earn $78 in cash back (5% of $1,500 + 1% of $300). If you used the same card without the bonus category activated, you'd get $18 (1%) cash back.
In general, you can activate a bonus category at the beginning of each quarter. Some card issuers allow you to activate up until the quarter ends, while others may close activation about two weeks before it ends. You can activate it online or via the credit card's app.
As with any credit card, it's important to understand the fine print. For example, if digital wallets and a retailer are both bonus categories during the same quarter, you can't get a double bonus for paying with a digital wallet at the retailer. Exclusions may also apply, such as groceries purchased from a wholesale store not being eligible for a grocery bonus category.
While cards with rotating bonus categories have their benefits, they may not be a good fit for all users. If you typically carry a balance, for example, a credit card that offers an introductory 0% interest rate or a lower interest rate may be a better fit.
How to Maximize Rewards With Bonus Categories
Here's how to use bonus categories to help you save money, and to avoid possible pitfalls:
- Add "activate bonus categories" to your to-do list. You can plan on it for January, April, July and October.
- Make a note (possibly on your phone) about which categories are offering bonus rewards, so you know which card to use.
- Have a secondary card with flat-rate rewards higher than the rotating category card's non-bonus rate for when you have topped out on rewards or are shopping for something outside the bonus categories.
- Resist the temptation to purchase something simply because it gets elevated rewards, especially if you can't pay it off at the end of the month.
- Pay off credit card balances in full every month. Interest charges typically exceed any savings gained from bonus categories
- Be sure you understand the rules and exclusions.
The Bottom Line
Bonus cash back categories can save you money, but you have to understand the rules of the game—and follow them—if you want to win.
Not everyone will want to activate categories and track purchases, and there are credit cards available for every taste. Experian's card comparison tool can help you find the card or cards that will best match your needs—whether those be a temporary reprieve on paying interest or travel perks.
The service is free and uses both your credit scores and your preferences about credit card features to find cards likely to fit your needs.