Which Cash Back Rewards Are Best: Rotating Categories, or Set Cash Back?

It’s become popular amongst cards offering cash back rewards to offer higher rewards on rotating categories.

However, there are still some credit cards that offer set cash back.

While a rotating category card is likely to provide you with more cash back than a card that only pays 1% on all purchases, cards with tiered programs might offer an advantage.

Set cash back or rotating categories?

Figure out how you’ll use your card and then see whether rotating categories or a set cash back is best for you (or both).

Rotating Categories

With rotating categories, you receive cash back on different types of purchases each quarter.

Often, you receive up to 5% cash back on specific categories.  So, if the quarterly categories are gas, toys, and restaurants, you receive up to 5% cash back on those types of purchases, and 1% cash back on everything else.

If you are willing to plan your spending by quarter, it can be easy to boost your cash back earnings in the appropriate quarter.

The main drawback to this type of rewards program is that you often have to sign up for the rewards.

Some of the credit cards offering this programs require you to visit the site each quarter and register for your higher cash back.  If you forget to register for the quarter, or if you register late, you miss out on some of your possible earnings.

Another thing to consider is a rewards cap on the rotating category.  Often you will see that you get that bonus cash back but only up to a set amount in purchases.  After that you will usually go back to the 1% cash back.  It’s not a bad deal, just that you have to keep it in mind since the caps can change with the rotating category change.

Set Cash Back

In some cases, it might actually be to your advantage to look into set cash back.

Programs that offer 2% on all purchases can put you about even with the rotating categories, but you don’t have to remember to register for your savings each quarter.

Tiered programs can also be beneficial.

The Blue Cash Everyday card from American Express offers 3%, 2%, and 1% cash back on different types of purchases automatically.  So you always get 3% cash back on groceries at stand-alone grocery stores, and 2% cash back on stand-alone gas stations — no matter what quarter it is.  (Upgrade to the Preferred card, and American Express offers you 6% back as a top tier.  But you will have to pay an annual fee.)

With these types of programs, though, you don’t get the chance to super-charge your cash back.

Create a Strategy to Combine the Two

It’s possible to create a credit card spending strategy that combines both types of cards.

There’s no rule that says you can’t have multiple credit cards.  As a result, it makes sense to get the best of both worlds.  You can plan your spending so that you have a rotating category card for quarters when you get 5% cash back.  During those quarters, boost your rewards with the higher cash back rewards.

However, for the categories that aren’t included in the quarter’s rotation, you use your set cash back card.  So, if groceries aren’t paying out 5% with your rotating category card, make the purchase with your set cash back card paying 3% on groceries.  It’s better than only getting 1%.  (Of course that’s just an example.  You need to check the cash back rewards cards you have to see their exact rewards.)

You’ll have to keep track, though.

And you’ll want to make sure you are using your credit cards in a savvy manner.  Plan your budget with the help of your credit card rewards, and then stick to it.

Make sure that you pay off your balances at the end of each month so that you aren’t losing the benefits of your rewards to the ravages of interest.

Remember, rewards of any type are useless if you’re paying it all back in interest to the credit card company.



Published or updated April 29, 2013.

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