What are rotating category credit cards and how do they work?

For some people, a rotating category credit card can be a powerful tool, giving them the opportunity to earn 5 percent cash back on many different shopping categories throughout the year. Other people avoid rotating credit cards because they don’t like strategizing to use them well or simply don’t understand how they work.

Whether a rotating category credit card is right for you depends on what you’re hoping to get out of your credit card. Most of today’s best credit cards offer rewards, but not all credit cards give you the opportunity to earn high-level cash back rewards on rotating bonus categories.

Here’s what you need to know about rotating category credit cards, including how rotating category cards work, some common rotating credit card categories and how to choose between the two best rotating category credit cards currently on the market.

What are rotating category credit cards?

Rotating category credit cards are cash back credit cards that offer their highest cash back percentage in shopping categories that rotate on a regular basis, often quarterly.

Unlike flat-rate cash back cards that offer the same cash back percentage on every purchase and bonus category cash back cards that offer higher cash back percentages on spending categories that never change (such as credit cards that reward grocery shopping), rotating category credit cards give you the opportunity to earn high-level cash back percentages on a variety of everyday expenses over the course of a year. In January, your bonus categories might include grocery stores and eBay; by October, your bonus categories could switch to Walmart and PayPal.

The best rotating category credit cards feature popular spending categories throughout the year, giving you the opportunity to maximize your bonus category rewards.

How do rotating category cards work?

Rotating category credit cards generally offer a high rewards rate — typically 5 percent cash back — on a few shopping categories that change every quarter. There’s usually a limit on the amount of bonus category rewards you can earn per quarter. Once you maximize your bonus category rewards, any additional purchases in your bonus categories will earn cash back at the card’s regular rewards rate.

Common bonus categories include restaurants, grocery stores, streaming services and gas stations — as well as specific retailers like Walgreens, Target or Amazon.com.

What are the best rotating category credit cards?

The best rotating category credit cards are the Discover it® Cash Back and the Chase Freedom Flex℠. Both offer 5 percent cash back on bonus categories that rotate every quarter, for a maximum of $1,500 in purchases (or $75 cash back) every quarter.

The Discover it Cash Back offers a flat 1 percent cash back on all other purchases, while the Chase Freedom Flex offers a range of cash back percentages depending on your shopping category.

The Discover it Cash Back and the Chase Freedom Flex have many similar features — but the amount of rewards you can earn with each will depend on your shopping habits and your financial goals.

Here’s how to decide whether the Discover it Cash Back or the Chase Freedom Flex is right for you.

Discover

The Discover it Cash Back offers 5 percent cash back on categories that rotate every quarter, for up to $1,500 in purchases per quarter (then 1 percent back). All other purchases receive an unlimited 1 percent cash back.

Plus, first-time cardholders can take advantage of Discover’s Cashback Match program, which matches all of the rewards you earn during your first year as a cardholder. If you maximize your bonus category spending every quarter, for example, you’ll earn $75 in cash back per quarter ($300 per year), and at the end of your first year, you’ll get another $300 in cash back.

In 2022, the Discover it Cash Back calendar includes the following rotating bonus categories:

Before you can start earning 5 percent cash back on your bonus category purchases, you’ll need to activate those categories.

Discover makes it easy to activate your rotating categories — all you have to do is log in to your Discover online account or app and select the option to activate them. (Want an even easier option? Discover will email you an activation link that works in a single click, no login necessary.)

It’s a good idea to activate your quarterly bonus categories well in advance of the start date because you won’t earn bonus cash back on any of until activate them. If you make a restaurant purchase on July 1 but don’t activate your quarterly bonus categories until July 10, for example, your July 1 restaurant purchase will only earn 1 percent cash back.

Chase

Like the Discover it Cash Back, the Chase Freedom Flex offers 5 percent cash back on categories that rotate every quarter, for a maximum of $1,500 in purchases per quarter (then 1 percent back).

However, the Chase Freedom Flex also gives you the opportunity to earn bonus cash back in a select number of categories, including:

• 5 percent cash back on Lyft purchases (through March 2025)
• 5 percent cash back on travel purchased through Chase Ultimate Rewards
• 3 percent cash back on dining
• 3 percent cash back on drugstore purchases

All other purchases earn a flat 1 percent cash back, and new cardholders can earn a sign-up bonus of $200 after spending $500 in the first three months.

Unlike Discover, Chase does not announce its bonus categories in advance. Here are Chase’s rotating bonus categories for 2022:

Like Discover, Chase requires you to activate your rotating bonus categories before you can earn the 5 percent cash back. Unlike Discover, however, Chase applies your activation to the entire quarter — as long as you activate before the deadline, which is generally 15 days before the quarter ends.

This means that if you make a category purchase on Jan. 1 but don’t activate your bonus categories until Jan. 10, your Jan. 1 category purchase will still earn 5 percent cash back.

How to maximize your rotating category card

The best way to maximize your rotating category cash back rewards is by planning ahead. Make sure to activate your rewards as soon as possible and use the categories to help plan your spending. If you know that grocery purchases are going to earn 5 percent cash back during a specific quarter, for example, consider stocking up your freezer and maximizing your rewards.

It’s also a good idea to pair one of the best rotating category credit cards with another top rewards card. Use your rotating category card any time you can earn 5 percent cash back and use your other rewards card for any purchases that might only earn 1 percent cash back on your rotating category credit card. That way, you can earn industry-leading rewards on everything you buy — no matter what category it is.

Bottom line

The best rotating category credit cards offer 5 percent cash back on popular spending categories that rotate every quarter, giving you the opportunity to earn rewards on a variety of purchases.

Once you understand how rotating category cards work, you can start using these powerful rewards cards to plan your shopping and maximize your cash back potential.