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Flat-rate cash back cards vs. bonus category cash back cards

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Fans of cash back credit cards know they’re a great way to earn rewards on your spending while also giving you maximum flexibility in your redemption options.

But not all cash back credit cards are created equal, and you’ll find a great deal of variety in terms of bonuses, benefits and cash back rates. Compared to other rewards cards that give you points or miles with varying worth depending on how you redeem them, cash back cards make it easy to know exactly how much you’re getting in return every time you swipe your card.

The two major categories for cash back cards are flat-rate cash back cards and bonus/rotating category cards. Making the best choice for your needs depends on your spending habits and what you expect to achieve by choosing a cash back card.

Here’s everything you need to know about flat-rate and bonus category cash back cards and how to choose the best card for your needs.

Flat-rate cash back credit cards

Flat-rate cash back cards offer a fixed percentage back from all your purchases, regardless of what you buy. Many flat-rate cards offer a cash back rate of 1.5 percent, but the best flat-rate cards will give you 2 percent, which means you’ll receive $2 for every $100 you spend with your card.

Pros of flat-rate credit cards

  • Hassle-free approach to cash back. Flat-rate cash back credit cards are simple. You don’t have to prioritize these cards for certain purchases in order to activate a certain bonus because you’ll receive the same amount back on every purchase.
  • Every purchase is eligible for cash back. Think about that purchase you made last weekend at the flea market, your set of new tires or the trip to the water park your kids have been begging for all summer. You will get cash back on every purchase no matter what.
  • No spending cap. Oftentimes cards with bonus categories will cap the rewards rate once you hit a certain spending threshold. No such threshold exists with flat-rate credit cards. Your rewards rate will always stay the same.

Cons of flat-rate credit cards

  • Reward rates typically don’t exceed 2 percent. Most flat-rate credit cards offer 1 percent to 1.5 percent cash back on every purchase, but it’s becoming more common to come across a card that offers 2 percent cash-back.
  • You’ll receive a fixed amount of cash back on every purchase. While this may be a pro for some who prefer flexible spending, this isn’t for the consumers who are trying to maximize their reward. Regardless of the item purchased, cardholders will receive the same percent back.

Who should get a flat-rate card?

Flat-rate cards are simple. They’re basically a “set-it-and-forget-it” rewards system, as you don’t need to think about which card to use for different purchases. They’re a great companion for those who want one go-to card for all purchases.

Flat-rate cash back cards are best suited for those who don’t want to keep track of different bonus categories or remember to activate bonus categories. These cards are also a good choice for people who mostly use their cards to cover spending not typically covered by bonus categories, like bills and utility payments.

Bonus category cash back credit cards

Bonus category cash back cards offer higher cash back rates in specific purchase categories, such as certain types of stores, restaurants, gas stations or travel, and a lower flat rate, usually 1 percent, on any other purchases.

Some bonus cash back cards have rotating cash back categories that change each quarter, while others offer the same high rate year-round. Some cards are now also offering the flexibility of choosing your own bonus spending categories or automatically offering bonus cash back on your biggest eligible spending category for the month.

Some cards with quarterly-rotating cash back categories, including the Discover it® Cash Back and the Chase Freedom Flex℠, require you to activate your new bonus categories each quarter in order to earn the boosted rate.

Bonus categories are usually capped, with the cash back rate dropping down to 1 percent after you hit the threshold. There are often activation requirements for rotating cards in order to get the higher rate.

Pros of bonus category credit cards

  • Earn a higher percentage of cash back. Bonus category cards typically earn a higher percentage of cash back in select categories that change quarterly. Oftentimes they offer 5 percent back on eligible spending (sometimes more), which is significantly more than the average 1.5 percent offered by most flat-rate cards.
  • Variety of cash back categories available. Bonus category cards allow you to earn a boosted rate on a variety of categories that typically change each quarter. With a bit of planning, you can really maximize your cash back across an array of categories.

Cons of bonus category credit cards

  • Bonus categories are usually capped. Once you hit a certain spending threshold, your rewards rate may drop to 1 percent. This varies from card to card.
  • Rewards categories can be hard to maximize without planning in advance. The rewards categories are constantly changing which can make it difficult to maximize if you find yourself spending more in one category at certain times of the year.
  • Quarterly activations are sometimes required.  Some cards require you to activate your new bonus categories each quarter in order to earn the boosted rate. If you fail to activate the bonus, you will not get the increased rate.

Who should get a bonus category card?

Bonus or rotating category cash back cards offer much higher earning potential than regular flat-rate cards, but they’re not for everyone. To make the most of these cards, you need to have a clear view of your personal finances. If you’re the type of person who likes to keep track of their spending and enjoys optimizing which card to use for different purchases, then these cards are a good fit.

If you’re considering a card that has rotating bonus categories, be honest with yourself about whether remembering to activate your categories each quarter will be burdensome. The activation process is usually as simple as tapping a button, but some may prefer a more hands-off rewards structure.

Best flat-rate cash back cards for 2022

Wells Fargo Active Cash Card

  • Rewards rate: Unlimited 2 percent cash rewards on purchases
  • Welcome offer: $200 cash rewards bonus after spending $1,000 on purchases within the first three months
  • Annual fee: $0
  • APR: 17.24 percent, 22.24 percent, or 27.24 percent (variable)

The Wells Fargo Active Cash® Card is a low-maintenance, no-fee rewards card with unlimited 2 percent cash rewards on purchases. It also offers 0 percent intro APR for 15 months on purchases from account opening and qualifying balance transfers from account opening (followed by 17.24 percent, 22.24 percent, or 27.24 percent (Variable APR).

Bank of America Unlimited Cash Rewards credit card

  • Rewards rate: Unlimited 1.5 percent cash back on all purchases (up to 2.62 percent for qualifying Bank of America Preferred Rewards members)
  • Welcome offer: $200 online bonus cash rewards after spending $1,000 within the first 90 days
  • Annual fee: $0
  • APR: 16.24 percent to 26.24 percent (variable)

An otherwise simple flat-rate cash back card, the Bank of America® Unlimited Cash Rewards credit card was designed with loyal BofA account holders in mind. The unlimited 1.5 percent base rate increases if you’re a Preferred Rewards member — you can access an unlimited 1.87 percent, 2.25 percent or 2.62 percent cash back rate, depending on which tier you’re in — making it one of the most valuable no-fee, flat-rate cards in the market.

Information about the Bank of America® Unlimited Cash Rewards credit card was last updated on 8/1/2022

Citi Double Cash Card

  • Rewards rate: Unlimited 1 percent cash back as you buy, plus another 1 percent when you pay for your purchases
  • Welcome offer: earn $200 cash back after spending $1,500 on purchases in the first 6 months of account opening.
  • Annual fee: $0
  • APR: 16.24 percent to 26.24 percent (variable)

The Citi® Double Cash Card is another example of a high-earning flat-rate card. And it has a unique way of encouraging users to avoid accumulating debt — cardholders get 1 percent cash back when they make the purchase and the other 1 percent when they pay the balance.

It does offer an impressive introductory 0 percent APR period of 18 months on eligible balance transfers (followed by a variable APR of 16.24 percent to 26.24 percent).

Best bonus category cash back cards for 2022

Blue Cash Preferred Card from American Express

  • Rewards rate: 6 percent at U.S. supermarkets and select U.S. streaming services (up to $6,000 per year, then 1 percent), 3 percent at U.S. gas stations and on transit, and 1 percent on everything else
  • Welcome offer: $350 statement credit after you spend $3,000 in purchases on your new card within the first six months
  • Annual fee: $95
  • APR: 16.24 percent to 27.24 percent (variable)

The Blue Cash Preferred® Card from American Express is an excellent bonus category cash back card for everyday use. Its highlights include an excellent cash back rate of 6 percent on purchases made in U.S. supermarkets (with an annual cap of $6,000, then 1 percent), 6 percent back on select U.S. streaming services, a higher-than-average welcome bonus and a 0 percent intro APR on purchases and balance transfers for 12 months (followed by 16.24 percent to 27.24 percent variable).

Chase Freedom Unlimited

  • Rewards rate: 5 percent on Lyft purchases (through March 2025), 5 percent on travel purchased through Chase Ultimate Rewards; 3 percent on dining and drugstore purchases; 1.5 percent on everything else
  • Welcome offer: Earn an additional 1.5 percent cash back on everything you buy (on up to $20,000) spent in the first year (offer through Bankrate)
  • Annual fee: $0
  • APR: 17.24 percent to 25.99 percent (variable)

The Chase Freedom Unlimited® offers great earning potential during the first year, with bonus cash back on drugstores, Lyft rides and beyond. The new 5 percent cash back on travel purchased through Chase Ultimate Rewards also adds plenty of value. One of its best features is its unlimited 1.5 percent cash back on all other purchases, which is more than what most other bonus category cards offer on non-bonus category purchases.

In other words, this is a bonus category card that could easily replace most standard flat-rate cards. Combined with a generous intro bonus and no annual fee, it’s an easy pick.

Citi Custom Cash Card

  • Rewards rate: 5 percent cash back (on up to $500 each billing cycle, then 1 percent) on your top spending category each billing cycle
  • Welcome offer: 20,000 ThankYou Points — worth $200 in cash back — after spending $1,500 on purchases in the first six months
  • Annual fee: $0
  • APR: 16.24 percent to 26.24 percent (variable)

The Citi Custom Cash℠ Card helps avoid having to break down your expenses every month to maximize your rewards. Regardless of what you purchase, it automatically chooses your top spending category each billing cycle and then gives you 5 percent cash back on spending in that category, with a $500 cap each billing cycle, after which you earn 1 percent.

The bottom line

The decision of choosing which cash back card is best for you comes down to what you expect to get out of your card. If you don’t care much about making the most cash back you can, perhaps because it sounds like a hassle juggling several cards, then a single flat-rate card is probably your best choice.

However, if you want to maximize your cash back, a single card isn’t going to cut it. In these cases, you’ll want to choose one or more bonus category cash back cards for your major spending and combine them with a good flat-rate card for everything else.

Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson writes expert content on personal finance, credit cards, loyalty and insurance topics. In addition to writing for Bankrate and CreditCards.com, Johnson does ongoing work for clients that include CNN, Forbes Advisor, LendingTree, Time Magazine and more.
Edited by
Associate Editor
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Part of  Introduction to Cash Back Credit Cards