Flat Cash Back Vs. Rotating Bonus Categories: How to Choose the Best Cash Rewards for Your Wallet

Flat Rate Cash Back Cards vs Rotating Bonus Category Cash Back Card
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Cash back credit cards offer simple rewards on everyday purchases, which is why they’re appealing for so many people. With a cash back card, you know the exact value you’re getting for every purchase, and you can use the cash back you earn to save on future spending in those same common categories. 

But there are several types of cash back cards that can make a good fit for you depending on your individual spending habits, and the amount of strategizing you’re willing to dedicate to get the most value from your rewards. In fact, two popular types of cash back cards — flat rate and rotating bonus category cards — are complete opposites in terms of rewards structures and planning required to maximize them. 

“It’s easy with a flat rate card, whether you get 1%, 1.5%, or 2% back. You don’t really have to think about what category you’re spending in,” says Beverly Harzog, a credit card expert and consumer finance analyst for U.S. News and World Report. “If you’re a person that doesn’t mind planning your purchases and which cards to use for different purchases, then that’s where the categories come in.”

Here are the main differences between flat rate cash back cards and cash back cards with rotating bonus categories — and how to decide which cash back card is best for your wallet.

Flat Rate Cash Back Card vs. Rotating Bonus Category Cash Back Card

Every time you swipe a flat rate cash back card, the amount of cash back you earn is the same — no matter what you buy. You don’t have to keep track of tiered earning rates or changing bonus categories. In exchange, you’ll earn a slightly lower cash back percentage on your spending; these cards typically earn 1.5% to 2% back at most. 

“Flat rate is just that — no matter what you buy, from a candy bar to a flat-screen TV, you earn your card’s cash back rate,” Benet Wilson, senior credit cards editor with The Points Guy recently told us. Like NextAdvisor, The Points Guy is owned by Red Ventures.

The Citi® Double Cash Card is a great example of flat cash back rewards. It earns unlimited 2% cash back on everything: 1% as you make purchases and the other 1% when you pay them off.

Cash back credit cards with rotating cash back categories, on the other hand, earn a higher percentage of cash back but only in select categories that change each quarter. They typically offer 5% back on eligible spending (up to limits) in the rotating quarterly category, which is higher than many other cash back cards.

Rotating cash back categories can include anything, but are commonly everyday categories, from streaming subscriptions and dining to popular retailers like Walmart and services like PayPal. But because your rewards categories are constantly changing, these cards can be more difficult to maximize, and require more planning than other cash back types — as well as quarterly activations to earn rewards.

The Chase Freedom Flex℠ is one of our favorite options in this category. You can earn 5% cash back on up to $1,500 spent in select rotating bonus categories every quarter you activate, such as at Walmart, Amazon, select streaming services, and even gas stations, then 1% on all other purchases. Chase also recently announced a new temporary bonus category for the Freedom Flex. Now through Dec. 31, Flex Freedom cardholders can earn 5% cash back on up to $1,500 spent in the eligible category they spend the most in. That means cardholders could potentially earn up to 9% cash back in certain categories this quarter.

Best rotating cash back cards:

Chase Freedom Flex

Discover it Cash Back

Citi® Double Cash Card

Citi® Double Cash Card

Editor’s Score: (4.4/5)
  • Intro bonus:
    N/A
  • Annual fee:
    $0
  • Regular APR:
    13.99% – 23.99% (Variable)
  • Recommended credit:
    670-850 (Good to Excellent)
  • Learn more externa link icon At our partner’s secure site
Chase Freedom Flex℠

Chase Freedom Flex℠

Editor’s Score: (4.7/5)
  • Intro bonus:
    $200
  • Annual fee:
    $0
  • Regular APR:
    14.99% – 24.74% Variable
  • Recommended credit:
    670-850 (Good to Excellent)
  • Apply Now externa link icon At Chase’s secure site
Wells Fargo Active Cash℠ Card

Wells Fargo Active Cash℠ Card

Editor’s Score: (4.6/5)
  • Intro bonus:
    $200 cash rewards
  • Annual fee:
    $0
  • Regular APR:
    14.99%-24.99% (Variable)
  • Recommended credit:
    670-850 (Good to Excellent)
  • Learn more externa link icon At our partner’s secure site

Which Cash Back Card Is Right for You?

If you’re trying to decide which card will make the best fit for your wallet, start by figuring out how much effort you’re willing to put into your card strategy. Then, look at your budget to see where you spend most of your money.

If you don’t want to plan where you spend to maximize rewards each quarter or many of your expenses fall outside of typical bonus categories, then a flat rate card will offer more simplicity and flexibility. If maximizing the amount of cash back you earn every year is a priority and you don’t mind planning a budget in advance, a rotating bonus category card may be a better fit — and with 5% back, could potentially result in more rewards over time. 

“Rewards programs can either be simple, like a flat rate card, or it can be more complicated,” says Harzog. “The possibility of earning great rewards is higher when it takes a little more work.”

Pro Tip

The main principle behind maximizing your cash back credit card — no matter what type —  is the same: charge only planned purchases you can afford to pay off each month and never carry a balance.

If you really want to get the best value from everything you buy, you could also consider pairing a rotating bonus category cash back card with a flat rate card. You’ll be able to earn a higher cash back rate on eligible categories, and still get a boosted rate on everything that doesn’t qualify (whereas you’d otherwise earn just 1% back on non-bonus category spending). The exact card combination that works for you will depend on your spending, but here are two that we recommend: 

  • Chase Freedom Flex and Citi Double Cash Card: When you pair these cards, you’ll earn 5% cash back up to $1,500 in select bonus categories every quarter you activate (currently at Walmart and Paypal for the fourth quarter of 2021) with the Freedom Flex, while also getting a 2% return on everyday spending when you use the Citi Double Cash Card (1% as you make purchases and the other 1% when you pay them off). Neither of these cards come with an annual fee.  
  • Wells Fargo Active Cash℠ Card and Discover it® Cash Back: The Wells Fargo Active Cash Card and Discover it Cash Back also complement each other well. To maximize your cash back, use the Discover card for purchases that earn 5% cash back in rotating categories (currently Amazon.com, Walmart.com, and Target.com through Dec. 2021) up to the quarterly maximum when you activate, then 1% cash back on other purchases. You can use the Active Cash Card for all other purchases to earn unlimited 2% cash rewards. Plus, you won’t have to pay an annual fee for either card.

Bottom Line

Deciding between a flat rate card and a bonus category card comes down to what you want to get out of using your card. 

If you want a simple, straightforward cash back program, then a card with unlimited flat rewards on every purchase is probably your best choice. But if you want to maximize your cash back, consider opting for a bonus category card or even combining the two to get a greater value from everything you buy.

All information about the Citi® Double Cash Card, Wells Fargo Active Cash℠ Card and Discover it® Cash Back has been collected independently by NextAdvisor and has not been reviewed by the issuer.