Published in: Credit Cards | Sept. 14, 2019

Should You Get a Credit Card With Rotating Rewards?

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Some credit cards offer rotating rewards. Is it a good idea for you to get one? 

It’s very common for credit cards to offer rewards for spending -- but there’s a lot of variation in how different credit card rewards programs are structured. For example, some credit card companies offer the same rewards all the time, such as a flat 1% cash back on all purchases, or double your points for travel purchases and one point per dollar spent on everything else. 

There’s also another type of rewards program you’ll find on many cards: one with rotating rewards. Typically, a card with rotating rewards will offer you very substantial rewards on a particular category of purchases -- but only for a limited period of time. For example, you might get 5% cash back on gas and groceries during one quarter of the year and 5% back on Amazon purchases during another.

Woman in polka dot dress holding credit card while unscrewing her car's gas cap.

Image source: Getty Images

These rotating rewards categories may seem very generous when it comes to paying you back for your spending -- but are they really good deals -- and could one be right for you? Here are some questions to ask yourself before you decide. 

Will you remember to activate the rotating rewards?

Cards with rotating rewards often require you to activate bonus rewards for each category whenever the categories rotate (most often quarterly). Although this usually isn’t very difficult and just involves logging into your online account, it’s still something you have to remember to do. 

If you tend to be forgetful about stuff this kind of stuff, you can miss out on the bonus points or cash back and receive points at the regular rate instead. And since the standard rewards rate on cards with rotating rewards is usually relatively low, failing to activate the bonus actually negates your card's key benefit.

If you don’t think you’ll remember to activate your rewards, or if you just don’t want the hassle, you may be better off with a card that provides better rewards for all purchases

Do you actually spend a reasonable amount of money on purchases in each bonus category?

It’s always a good idea to maximize bonus rewards by choosing a card that applies them to the spending you do most often. If you splurge at the grocery store, for example, it makes sense to get a card that offers bonus cash back on groceries.

When a card offers bonus rewards on rotating categories, it’s worth considering how much spending you’ll do in all of the different categories that give bonuses throughout the year -- not just one or two. If you spend a lot in just one of the particular categories but not any of the others, you may be better off with a different rewards card.

Say, for example, that you opt for a card that provides 5% cash back on groceries but only for three months of the year. The other bonus 5% cash back categories aren’t things you spend money on. Compare this card to another that offers you 3% cash back on groceries all year long, assuming the standard cash back rate on nonbonus categories is 1% for both cards.

If you spend $500 per month on groceries:

  • You'd get $120 cash back with the rotating rewards card. You’d earn $75 cash back during the three-month period for which you’re getting the 5% cash back ($500 per month over three months is $1,500 total, so 5% of $1,500 would be $75). During the other nine months of the year, you’d only get 1% back on groceries, which is $45 back ($500 per month over nine months is $4,500, so 1% of $4,500 is $45). 
  • You'd get $180 cash back with the normal rewards card. With 3% cash back year-round, you’d get $15 a month. ($500 times 12 is $6,000 and 3% of $6,000 is $180). 

In this case, although the first card may seem like it’s rewarding you more generously for grocery spending, you’re $60 better off with the card that gives you lower but steady rewards throughout the year.

To figure out which card would be best for you, estimate your spending on each of the different bonus categories during the time the bonus is in effect. Then, compare the rewards you’d earn on that bonus spending plus the rewards you’d earn the rest of the year at the standard rate.  Opt for the card that provides the most total rewards. 

Are you willing to use multiple credit cards?

Another key consideration is whether you are willing and able to have multiple credit cards. If you can use the card with the bonus rewards only to buy qualifying items during the bonus period and you use other rewards cards on other purchases or at other times, you could end up better off.

Just be sure you’re able to keep track of which card you should be using when, which category is currently offering bonus rewards, and whether you’ve remembered to activate the bonus. 

A card with rotating rewards could work for you

If you shop in most of the categories that offer bonus rewards and you’re willing to do the work to activate the bonus, a card with rotating rewards could provide the best bang for your buck. But if you just want the simplest credit card rewards program possible, a different kind of rewards card would likely be a better bet. 

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