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Is choosing bonus categories the next big trend in credit cards?

Summary

Is the updated Bank of America Cash Rewards card starting the newest credit card trend?

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Bank of America recently revamped the Bank of America® Cash Rewards credit card, allowing cardholders to choose from six bonus categories to earn 3 percent cash back. Now, rather than earning 3 percent back on gas, users can choose between categories such as dining, travel and online shopping.

When it comes to rewards credit cards, the idea that users can choose their own bonus category is a fairly new one. However, the recent update to the Cash Rewards card shows the trend is gaining traction.

History of choose your own category cards

Several business credit cards have offered this choose-your-own-adventure style rewards program for a while, including the U.S. Bank Business Select Rewards card. However, similar programs for personal rewards cards have been few and far between. Cards such as the U.S. Bank Cash+™ Visa Signature include the perk, but it hasn’t been a common offering among major rewards cards.

With the Bank of America Cash Rewards card offering cardholders additional freedom to earn rewards where they want them, it seems choosing your own bonus category might be the next big rewards card feature.

How does choosing a bonus category work?

With the new Bank of America Cash Rewards earning rate, cardholders have the added flexibility of choosing a bonus category that suits their needs.

Previous offerCurrent offer
Rewards rate
  • 3% cash back on gas
  • 2% cash back on groceries and wholesale purchases
  • $2,500 combined limit on 2% and 3% categories each quarter
  • 1% cash back on general purchases
  • 3% cash back on one category of choice (gas, online shopping, dining, travel, drug stores or home improvement and furnishings)
  • 2% cash back on groceries and wholesale purchases
  • $2,500 combined limit on 2% and 3% categories each quarter
  • 1% cash back on general purchases

Every calendar month, Bank of America Cash Rewards cardholders can choose a new 3 percent cash back bonus category, to better align with their spending habits throughout the year. So if you have a trip to plan one month, you can change your 3 percent category to travel. The next month, you might get more value by switching to 3 percent cash back on dining.

To help you make an informed decision, Bank of America provides cardholders with a breakdown of spending in each of the six available bonus categories. You’ll be able to clearly see where you spend the most money on your Cash Rewards card and maximize your rewards earning.

If you don’t choose one of the other five categories, the 3 percent cash back bonus category will default to gas. For cardholders whose spending doesn’t change frequently, your rewards category will remain the same as the previous month. That way, you don’t have to worry about selecting your preferred kind of purchase every month.

Cardholders are capped at $2,500 in purchases each quarter on both their choice 3 percent category and 2 percent on groceries and wholesale purchases. Once you reach the cap, you’ll still earn 1 percent cash back on all purchases.

Benefits of choosing your rewards category

The ability to choose your own rewards category adds incredible flexibility to the Bank of America Cash Rewards card. It is now easier than ever to ensure the rewards program matches up with your individual needs.

While most cards lock you into a particular bonus category, the Cash Rewards card can evolve as your purchases do. That means the card won’t be less rewarding if your spending patterns change. If one month you are spending more on travel or dining, you can still earn great rewards without needing separate cards.

Comparing cards that let users choose their rewards category

The Bank of America Cash Rewards card is not the first rewards card to offer users a choose your own category feature, but it does come with a few additional benefits that set it apart.

For example, the U.S. Bank Cash+ Visa Signature also lets cardholders choose their bonus categories.

Bank of America Cash Rewards Card
Bank of America® Cash Rewards credit card
U.S. Bank Cash+ card
U.S. Bank Cash+™ Visa Signature
Rewards rate
  • 3% cash back on one category of choice (gas, online shopping, dining, travel, drug stores or home improvement and furnishings)
  • 2% cash back on groceries and wholesale purchases
  • $2,500 combined limit on 2% and 3% categories each quarter
  • 1% cash back on general purchases
  • 5% cash back on 2 categories of your choice ($2,000 purchase limit per quarter)
  • 2% cash back on your choice of one everyday category, such as gas stations or grocery stores
  • 1% cash back on other purchases
Sign-up bonus
$200 online cash rewards if you spend $1,000 in first 90 days
$150 if you spend $500 in first 90 days
Average yearly rewards value ($1,325 monthly spend)$325$265

Though they offer similar rewards rates, there are a few key differences in these programs that set Bank of America Cash Rewards apart.

Higher spending cap

The Bank of America purchase cap for 2 and 3 percent bonus categories is $2,500 per quarter, while U.S. bank limits 5 percent bonus purchases at $2,000 per quarter. While the Cash+ Visa doesn’t limit its 2 percent bonus category, you’ll still earn more in rewards with the higher Bank of America cap.

Change rewards more frequently

With the Bank of America Cash Rewards card, you can choose a new category to earn 3 percent cash back on up to every calendar month. With the U.S. Bank Cash+, you can change the category each quarter.

No penalty for forgetting to choose a category

Even if you don’t pick one of the other available categories, the Bank of America Cash Rewards card will automatically default to 3 percent back on gas purchases. Since gas makes up a big portion of most users’ budgets, you’ll still earn great rewards. With the U.S. Bank Cash+ however, failing to choose a bonus category each quarter means you’ll only earn 1 percent cash back on all of your purchases. If you don’t stay on top of your rewards program, you lose significant value.

Final thoughts

The added flexibility and customization provided by a choose your own bonus category rewards structure is invaluable to rewards card users. With Bank of America giving users more of what they want, it is likely they are at the forefront of the next big trend in credit cards.

See related: How to maximize the Bank of America Cash Rewards card’s 3-percent bonus in 2019, Earn $150 bonus cash back with the Bank of America® Cash Rewards credit card

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Credit Card Rate Report Updated: September 11th, 2019
Business
15.45%
Airline
17.38%
Cash Back
17.53%
Reward
17.40%
Student
17.58%

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