How to win the category bonus war, with no annual fees

I recently detailed how American Express hopes to win the category bonus war (see “Amex’s EveryDay weapons in the category bonus war”).  Their goal is to incentivize consumers to use their cards for all daily spend.  And, as I showed recently, their new cards do a pretty good job of that (see “Amex’s powerful new EveryDay cards”).  However, if you’re willing to juggle a few cards, you can do better, even with no-annual fee cards.

Many credit cards offer specific category bonuses where rewards are doubled (2X), tripled (3X), or even quintupled (5X) for spend within specific categories.  I’ve cataloged the best of these options in my “Best Category Bonuses” page.  By holding the right credit cards and approaching purchases the right way, it’s possible to average almost 5X across all day to day spend.

The value of points and miles varies tremendously from one program to the next.  For the purpose of this post, though, I’ll treat points and miles as if they are roughly equal and worth about a penny each.  I’ll eliminate point programs that are clearly worth less than a penny, though.  This latter group includes most hotel point programs: Hilton, Club Carlson, IHG, etc. That’s not to say that it’s impossible to get a penny per point value (or more) with these programs.  It’s just unusual to. SPG and Hyatt are the only hotel programs that I can think of were points usually are worth more than a penny each, but the credit cards that earn SPG and Hyatt points do not offer 5X category bonuses, so you won’t see those options here either.

Annual fees

Some of the best cards with high multiples do have annual fees.  And, these cards often offer category bonuses or other perks that make their fees worth paying.  Whether or not the annual fee is worth it will depend on each person’s ability to get value from the card’s perks and bonuses.  So, even though I pay annual fees for several cards myself, that kind of analysis is outside of the scope of this post.

Limited time offers

Some cards offer limited time category bonuses.  A great example is the Wells Fargo Cash Back card that offers 5% cash back at grocery stores, drug stores, and gas stations for the first 6 months of card membership.  While these are often terrific options for short term gain, they are also excluded from this analysis.

Groceries

For many families, I expect that groceries are their biggest usual credit card expenses.  Here are my top, no annual fee, picks for grocery purchases:

SallieMae World MasterCard:  5% cash back at grocery stores (up to $250 per month in spend).  Also offers 5% at gas stations ($250/month cap) and bookstores ($750/month cap).  This is a good option for those who are frequent, but not big spenders at grocery stores, gas stations, and bookstores.

Amex Blue Cash (current version): 3% cash back at grocery stores for your first $6000 of grocery spend annually, then 1% cash back.  Also offers 2% cash back at U.S. gas stations; 2% cash back at select U.S. department stores. Use this one after hitting your $250 per month spend on the SallieMae card. This offer has expired

Amex Blue Cash (old version): 1% cash back at grocery stores for your first $6500 of purchases annually, then 5% cash back at gas stations, drug stores, and grocery stores.  This is a good option only for very big spenders due to the $6500 hurdle.  See this post for details about how to get this card.

Gas

Depending upon your driving habits, gas may be a very big regular expense.  Here are my top, no annual fee, picks for gas station purchases:

Fort Knox Federal Credit Union Visa Platinum: 5% cash back when paying at the pump at gas stations. 1% cash back elsewhere.

Other good options include:

  • SallieMae World MasterCard:  5% cash back at gas stations ($250/month cap).
  • Amex True Earnings Business Card from Costco: 4% cash back at gas stations (capped at $7K per year)
  • Amex Blue Cash (old version): 1% cash back at gas stations for your first $6500 of purchases annually, then 5% cash back for gas, groceries, and drugs.  This offer has expired

Eating out

For those, like me, who signed up for the Citi Forward card while it still offered 5X for dining, bookstores, etc., there’s no question about what card to use at restaurants.  For others, there are still a few good options:

US Bank Cash+: The Cash+ card lets customers pick two 5% cash back categories each quarter.  Restaurants are one option.  Fast food is another.  Use this card to get 5% cash back while eating out, up to $2K spend per quarter.

Miscellaneous other options: There are quite a few cards that offer 3% cash back for dining, such as: Chase AARP, Amex SimplyCash (restaurant category is one of several choices), Lowes Business Rewards, Huntington Voice.

Cell phone / Cable / Internet

For many people, bills from Verizon, AT&T, Comcast, etc. add up to pretty big monthly expenses.  Here are my top picks:

Chase Ink Cash Business Credit Card: Offers 5X for office supply stores, cell phone, cable, and internet charges (up to $25K spend per cardholder year).

Amex SimplyCash: This small business card offers 5% cash back for office supply stores, and wireless telephone services.  Note that it does not offer 5X for cable and internet charges the way the Chase Ink cards do.

Travel

PenFed Premium Travel Rewards Card: Offers 5X for airfare purchases

Amex SimplyCash: This small business card offers several 3% cash back categories (you can pick one), including these travel related options: airfare, hotels, and car rentals.  Also, Amex business cards are automatically enrolled in the Amex OPEN Savings program which offers an automatic 5% cash back for Hyatt hotels in the US.

Other Spend

For categories of spend not shown above, try these options:

Gift Cards

Using a card offering a good bonus at a drug store, grocery store, or office supply store, buy gift cards to other merchants.  Grocery stores often have the added bonus of offering fuel points (good for gas discounts) for gift card purchases.

Choose Categories

The US Bank Cash+ card lets you pick two 5% cash back categories every 3 months.  Current category options include: fitness centers, sporting good stores, cell phone, bookstores, department stores, restaurants, electronics stores, fast food, furniture stores, car rental, charity, and movie theaters.

Similarly, the Amex SimplyCash business card lets you choose one 3% cash back category each year.  Current options include: airfare purchased directly from airlines, hotel rooms purchased directly from hotels, car rentals purchased from select car rental companies, U.S. gas stations, U.S. restaurants, U.S. purchases for advertising in select media, and U.S. purchases for shipping

Rotating category bonuses

Another great option is to use credit cards that offer rotating 5X categories.  A few very good options include:

  • Chase Freedom.  Rotating 5% categories, up to $1500 in spend per quarter.  When paired with a Chase checking account, you get an additional 10% annual bonus (i.e. 5% cash back becomes 5.5%).
  • Discover It.  Rotating 5% categories, up to $1500 in spend per quarter.
  • Citi Dividend Platinum Select.  Rotating 5% categories, up to $6,000 in spend per year.

 

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

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JTravels
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JTravels

I get groceries at Wal-Mart. Do you know if WM is coded to get grocery bonus?

William Charles
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It depends on the WalMart, if you’re using a VISA card you can do a MCC lookup to see how it’s coded. Or just buy a small item and check that way. Most are coded as discount stores, some are grocery.

iahphx
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iahphx

I used to do the PenFed card for the airfare bonus, but PenFed has slowly (and without notice) reduced the value of one of their points. For awhile, I think they were worth more than 1.5 cents each. Last I looked, they were only worth .8 cents. So PenFed is really only giving you a 4% rebate. And you have to buy gift cards in certain fixed denominations. That might still be worthwhile if you bought a ton of airfare, but I’ve actually found myself buying fewer airline tickets in recent years (they’ve gotten significantly more expensive, so I’m more focused on using miles). There are many other cards that provide an airfare category bonus — not to mention using airfare purchases to meet minimum spends — so I no longer find it worthwhile to manage a PenFed card that’s mildly useful for only one spending category.

Jonathan
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Jonathan

Penfed is still 5% cb for gas. Best part is rewards are automatically applied every month. The recently added annual fee can be eliminated with a money market account (funded with 1 cent).

ChrisFlyer
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ChrisFlyer

I just got the “old” Amex Blue card. If I spend $6500, will I start getting 5% back (on bonus categories) immediately, or will the bonus increase AFTER my first statement closes? Also, will I get 5% back for the rest of the calendar year? Or for one year starting based on when I got the card?

Elaine
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Elaine

Great post, Greg, thank you. Since I can buy a prepaid I like at a grocery store I frequent, I am always looking for how to get 5X at grocery stores. This is a post I will not just bookmark, but I’ll printout and highlight!

It was a pleasure to meet you in CLT. From Matt’s writeup, it sounds like a good part of the planning and ultimate success was the result of your involvement. Thanks so much for all you did to make it happen, and happen so very well.

Cheers!

Ran
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Ran

I am having trouble as how to meet 5% at lowes for chase freedom for this quarter. I have enough of amazon,dominos,subway gift cards. So not planning to get new one. I do not see any vanilla cards as well at lowes. Any better suggestion to get 5% at lowes ?

Leigh
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Leigh

I JUST applied for the Amex Blue Preferred last month. Is that considered a different product than the “old” Blue? Will I still be able to apply for it?

David
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David

We spend a lot at Walgreens. What do you consider to be the best card to use at drugstores?
Thanks in advance.