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.

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.

What are cash back credit cards?

Cash back cards are a type of rewards credit card that returns a percentage of your spending to your account. You can then use it to help pay for other purchases, transfer it to a bank account to use as you please or purchase gift cards or other special offers from your issuer.

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.

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.

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.

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.

Flat-rate cash back vs. bonus category cash back

The decision of choosing one, the other or both comes down to what you expect to get out of using 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.

Best flat-rate cash back cards for 2021

Wells Fargo Active Cash℠ Card

  • Rewards rate: Unlimited 2 percent cash rewards on all purchases
  • Welcome offer: $200 bonus after spending $1,000 within the first three months
  • Annual fee: $0
  • APR: 14.99 percent to 24.99 percent (variable)

The Wells Fargo Active Cash Card is a low-maintenance, no-fee rewards card with unlimited 2 percent cash rewards on all purchases. It also offers 0 percent APR for 15 months on purchases and qualifying balance transfers (followed by 14.99 percent to 24.99 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 bonus after spending $1,000 within the first 90 days
  • Annual fee: $0
  • APR: 13.99 percent to 23.99 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.

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: None
  • Annual fee: $0
  • APR: 13.99 percent to 23.99 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. The main downside is that this card doesn’t offer a welcome bonus. However, it does offer an impressive introductory 0 percent APR period of 18 months on eligible balance transfers (followed by a variable APR of 13.99 percent to 23.99 percent).

Best bonus category cash back cards for 2021

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: $300 statement credit after you spend $3,000 in purchases on your new card within the first six months
  • Annual fee: $0 introductory annual fee for the first year, then $95
  • APR: 13.99 percent to 23.99 percent (variable)

The Blue Cash Preferred 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), the same rate on select U.S. streaming services, a higher-than-average welcome bonus and a 0 percent intro APR on purchases for 12 months (followed by 13.99 percent to 23.99 percent variable).

Chase Freedom Unlimited

  • Rewards rate: 5 percent cash back on grocery store purchases (not including Target or Walmart purchases) on up to $12,000 spent in the first year; 5 percent on Lyft purchases (through March 2022); 5 percent on travel purchased through Chase Ultimate Rewards; 3 percent on dining and drugstore purchases; 1.5 percent on everything else
  • Welcome offer: $200 cash bonus after spending $500 within your first three months
  • Annual fee: $0
  • APR: 14.99 percent to 24.74 percent (variable)

The Chase Freedom Unlimited offers great earning potential during the first year, with bonus cash back on groceries and 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 and easily attainable 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 $750 on purchases in the first three months
  • Annual fee: $0
  • APR: 13.99 percent to 23.99 percent (variable)

The Citi Custom Cash 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

While some people want more flexible options and choose cash back cards that let them pick their bonus spending categories, others prefer simplicity and will go for a flat-rate card instead. However, if you love having lots of choices and enjoy getting big rewards every time you spend money, you may be better off using both types of cards.

There are so many good options, many without an annual fee, that you can design a card strategy that works for your spending without having to pay for the privilege.

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.
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