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

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Choosing your own bonus category 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 and SimplyCash®
Plus Business Credit Card from American Express
. 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 offer Current 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

$150 online cash rewards if you spend $500 in first 90 days

$150
if you spend $500 in first 90 days

Average yearly rewards value ($1,325 monthly spend)


$318

$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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