Pros of bonus category cash back cards
- They provide a higher cash back rewards rate. Bonus category cards offer a higher rewards rate in certain purchase categories. These categories may change quarterly, offering up to 5 percent back. If you maximize bonus category spending, you can earn substantial rewards.
- You’ll see a variety of cash back categories. Bonus category cards allow you to earn a boosted rate in a number of categories like retail stores, streaming services and gyms. You can align your spending habits with the card to maximize rewards.
- They encourage a hands-on approach. Bonus category cards require some strategy to maximize their rewards. This might help you keep a close eye on your budget and spending.
Cons of bonus category cash back cards
- They might have a category spending cap. While it varies from card to card, some bonus categories drop to a 1 percent rewards rate once you hit a certain spending threshold.
- Maximizing takes planning. Bonus categories may change quarterly, so it can be tricky to maximize rewards without planning your purchases in advance. If you don’t earn on a bonus category, you may only earn 1 percent on other purchases.
- Quarterly activations are sometimes required. Some cards require you to activate your bonus categories each quarter. If you forget, you won’t get the boosted rate.