How to maximize cash back with rotating bonus categories

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Some people love rotating bonus category credit cards. They activate their bonus shopping categories as soon as they get the chance and already have the rotating bonus categories for 2022 memorized.

Other people avoid rotating bonus category credit cards because they’re worried that they won’t be able to keep track of all of the categories. If that’s you, we’re going to help you understand how rotating bonus category cards work and how you can use bonus category credit cards to maximize your cash back rewards.

Many people use their cash back rewards to pay off their credit card bills, but you can also turn your cash rewards into gift cards, redeem them for online purchases and more.

Let’s take a close look at how you can maximize your cash back strategy with rotating bonus categories.

Learn more: How to choose a cash back credit card

What are rotating bonus categories?

Cash back is a type of credit card reward that gives you a percentage of cash back on your purchases. When it comes to cash back credit cards, some offer flat-rate cash back while others offer higher cash back rates in specific categories that change each quarter.

So, rotating bonus category credit cards are also precisely what they sound like—credit cards that offer bonus cash back rewards on different shopping categories and regularly rotate the categories that earn the highest rewards.

A few top cash back credit cards offer rotating bonus category rewards. The shopping categories that earn the highest percentage of cash back rotate regularly, giving cardholders the opportunity to earn high amounts of cash back on many different kinds of purchases.

For example, according to the Discover it® Cash Back calendar for 2021, cardholders can currently—and through December—earn 5 percent cash back on purchases at Walmart.com, Target.com and Amazon.com (on up to $1,500 combined spending, then 1 percent; activation required). Next quarter (January through March), those categories will change to grocery stores, CVS and Walgreens.

Benefits of rotating bonus category credit cards

Rotating bonus category credit cards offer a lot of benefits. Cardholders can earn higher cash back percentages on popular spending categories, such as grocery stores, gas stations and restaurants.

Categories are often tied to seasonal spending habits. So, during the holiday season, for example, expect your rotating bonus categories to include popular retailers like Amazon.com and Walmart. The best rotating bonus category credit cards also offer valuable sign-up bonuses that allow new cardholders to earn even more cash back.

Drawbacks of rotating bonus category cards

The biggest drawback of rotating bonus category cards? Since rotating bonus category credit cards regularly change the shopping categories that earn the highest cash back percentage, you might end up stuck with a bonus category you don’t spend that much money on.

Plus, rotating bonus category cards often require cardholders to activate their new bonus categories before they can start earning cash back. This means if you forget to activate your bonus categories, you could miss out on some of the cash back you might have earned.

The most popular rotating cash back category cards

The most popular rotating cash back category cards are the Discover it Cash Back card and the Chase Freedom Flex℠ . In many ways, the Discover it Cash Back card and the Chase Freedom Flex card are very similar—but they have a few key differences.

How they’re similar

  • Bonus category rate—Both the Discover it Cash Back and the Chase Freedom Flex allow you to earn 5 percent cash back on categories that rotate every quarter (activation required) for up to $1,500 in combined category spending per quarter (then 1 percent).
  • Activation required—Both cards require you to activate your bonus categories before you can start to earn heightened cash back, but the way Chase and Discover approach bonus category activation is slightly different.

How they’re different

  • Non-bonus category spending—The Discover it Cash Back card offers 1 percent cash back on all other purchases, but the Chase Freedom Flex card gives you the opportunity to earn 5 percent cash back on travel purchased through Chase Ultimate Rewards, 3 percent on dining and drugstores and at least 1 percent on other purchases.
  • Retroactive rewards—With Discover, you have to activate your bonus categories before you can start earning bonus cash back. If you don’t activate your January-to-March bonus categories until February, for example, you won’t be able to earn the increased cash back rate on any bonus category purchases made in January. Instead, you’ll earn only 1 percent cash back on those purchases. Chase lets you activate your bonus category rewards throughout the quarter (though there is an activation deadline on the 14th of the last month in the quarter). After activation, your bonus cash back rate is applied retroactively to all qualifying bonus category purchases made during that quarter.
  • Sign-up bonuses—Discover will match all the rewards you earn in your first year as a cardholder with the Discover it Cash Back. If you max out your quarterly bonus categories, you could earn $300 cash back. Discover will match that cash at the end of your first year as a cardholder, giving you an extra $300. With the Chase Freedom Flex card, you can earn a $200 cash back bonus after you spend $500 on purchases in the first three months from account opening—and you also get the opportunity to boost the cash back you earn on groceries significantly. New cardholders earn 5 percent cash back on grocery store purchases (not including Target or Walmart) on up to $12,000 spent in the first year. That’s up to $600 in cash back on groceries alone, in addition to the $300 cash back you could earn if you max out your quarterly bonus category rewards and the $200 from the sign-up bonus.

Learn more: Discover it Cash Back vs. Chase Freedom Flex

Discover it Cash Back 2021 bonus categories

The Discover Cash Back card regularly offers bonus category rewards on groceries, gas, online shopping and more. Remember, you need to activate your Discover card categories before you can start earning the heightened cash back rate, so don’t procrastinate!

Keep an eye on your email or log in to your Discover online account so you know when it’s time to activate your quarterly bonus categories.

Here are the Discover card categories for 2021:

  • January through March: Grocery stores, Walgreens, CVS
  • April through June: Gas stations, wholesale clubs, select streaming services
  • July through September: Restaurants, PayPal
  • October through December: Amazon.com, Walmart.com, Target.com

Chase Freedom Flex 2021 bonus categories

Like Discover, Chase regularly offers bonus category rewards on categories like online shopping, gas stations and groceries. Unlike Discover, Chase does not release its upcoming quarterly bonus categories in advance. Watch your email, check your Chase online account or keep an eye on Bankrate’s Chase Freedom Flex bonus category guide to learn what kind of quarterly bonus categories to expect in 2021—and don’t forget to activate your rewards.

Here are the Chase Freedom Flex bonus categories for 2021:

  • January through March: Wholesale clubs, Internet, cable and phone services, select streaming services
  • April through June: Gas stations and home improvement stores
  • July through September: Grocery stores (excluding Walmart and Target) and select streaming services
  • October through December: Walmart and PayPal purchases

For Q4 of 2021, Chase is offering a top-spend category bonus. Cardmembers who activate their Q4 bonus categories will automatically earn 5 percent total cash back (4 percent in addition to their unlimited 1 percent cash back) on up to $1,500 in the eligible rewards category where they spend the most through Dec. 31, 2021.

Eligible rewards categories include travel (including transit), dining, home improvement stores, select streaming services, select live entertainment, gas stations, drugstores, fitness clubs, grocery stores (not including Target and Walmart purchases).

Additional ways to maximize cash back with rotating bonus category cards

Rotating bonus category credit cards are a great way to earn high percentages of cash back on certain types of purchases, but what about everything else you buy?

Here are two ways to maximize your cash back earnings with rotating bonus category cards:

Pair with a flat-rate cash back card

If you want to earn as many cash back rewards as possible, try pairing a rotating bonus category card with a flat-rate cash back card. That way, you can use your bonus category card every time you make a purchase that falls within its quarterly bonus categories and your flat-rate cash back card for every purchase that doesn’t qualify for bonus category rewards.

Pair with a card that matches your spending habits

Some people sign up for rotating bonus category cards because they want to earn a lot of cash back on their holiday shopping. But if you’re the kind of person who spends a lot of money on retailers like Amazon, Walmart and Target, why not pair your rotating bonus category card with a credit card that rewards online shopping? That way, you can earn high-level cash back rewards on your Amazon or Target purchases throughout the year.

Depending on your shopping habits, you might also want to pair a rotating bonus category card with a credit card that rewards grocery shopping or a credit card that rewards restaurant spending. Either way, you’ll be able to earn more cash back on the purchases you make most often.

The bottom line

Cash back is an opportunity to earn a little extra money on everyday purchases. Some of the top cash back credit cards offer the same amount of cash back on every purchase or different cash back percentages depending on the type of purchase. But a few of the best cash back cards reserve their highest rewards rates for rotating bonus categories.

If your shopping habits are flexible enough to cover many different spending categories, you might want to consider a rotating bonus category cash back credit card. To maximize the cash back you can earn, pair your rotating bonus category card with a second cash back card that offers high cash back rewards on your most frequent purchases.

Learn more: Weighing a cash back card vs. a points and miles card