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Some credit cards offer not only the standard 1% cash back on everyday spending, but also rotating quarterly 5x earnings categories, which effectively means 1% x 5 = 5% cash back. Using the right bonus-category card for the right type of purchase is a great way to maximize your savings. And if you are a little flexible, these quarterly bonus categories can even be stretched to cover almost all of your spending. Today, we will summarize the credit cards that offer quarterly 5x cash back, their corresponding categories, and how to make the most of these 5x bonuses.
[Updated 10/1] Q4 2018 is here. Which cards should you keep in your wallet, and which one should get top priority? Here is a quick breakdown:
- Chase Freedom: Wholesale Clubs: good for shopping at Costco. Sam's Club sells Visa gift cards, and when combined with Dosh's 5%-20% cash back, it can be a solid option. Just note that this Visa gift card cannot be loaded directly at Walmart. Department Stores: great for holiday shopping season spending. Sears has $200 Visa gift cards that can be loaded at WM. Chase Pay: still useful for in-store purchases at Best Buy. If you shop at Walmart, you can also use Chase Pay on walmart.com to buy gift cards. (5x activation link)
- Discover card: Discover's Q4 5% categories are Amazon and Wholesale Clubs, such as Sam's Club, BJs, etc. During the holiday shopping season, this is a very strong category and most people should be able to max it out. If not, you can stock up on Amazon gift cards, or buy various gift cards at Sam's Club, including Sam's Club gift cards, which can be used at Walmart. (5x activation link)
- Citi Dividend: Best Buy and department stores. These categories are also well suited for shopping. For Visa gift cards, just refer to the Chase Freedom approach above. You probably will not max out the bonus in the first three quarters, so this quarter is your chance to spend the full $600. (activation link)
- US Bank Cash+ lets you choose 2 different 5% categories (activation link): since the categories are user-selected, it should be pretty easy to max out.
Overall, Q4 is centered around shopping-related bonus categories. Even if you do not have that much shopping to do, it is still fairly easy to liquidate through Visa gift cards. If you shop a lot on Amazon, note that Sears counts as a department store and carries a large number of Amazon gift cards. There are also reports that Best Buy has started stocking Kindle gift cards again (=Amazon).
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2018 Quarterly 5x Cash Back Summary
Here is a summary of the four most common credit cards with quarterly rotating bonus categories:
- Discover it (no annual fee, $50 welcome bonus, Cashback Match)
- Chase Freedom (no annual fee, $175 welcome bonus, quarterly 5x UR)
- US Bank Cash+ (no annual fee, $125 welcome bonus, choose 2 quarterly 5% categories and 1 2% category)
- Citi Dividend (no annual fee, no longer available for new applications, only via product change)
Discover it
- Q1: Gas Stations (you can test whether gift cards purchased inside the attached convenience store also earn 5%) and Wholesale Clubs (Sam's Club sells many types of gift cards, including $500 Visa gift cards).
- Q2: Grocery Stores at 5%. Similar to Chase, grocery stores are an easy category to max out. However, Discover grocery purchases do not include warehouse clubs, supercenters, or discount stores, so you may want to test with a small transaction first. Also, although Discover offers cashback at checkout from grocery stores with no fee, that cash withdrawal likely will not earn any rewards. Most importantly, you must activate the 5% category first in order to earn the bonus. Activate it as soon as possible! 5% activation link
- Q3: Restaurants earn 5% cash back. Some smaller restaurants may not accept Discover, so it is safer to carry another card as backup. If you have favorite restaurants you visit often, you could consider stocking up on some gift cards in Q3, though not too many. If your Discover card is within its first year after approval, dining is effectively earning 10% cash back, so enjoy it. Again, Discover's 5% must be activated before use.
- Q4: Amazon and Wholesale Clubs. Must activate by December 31.
- Quarterly 5x activation link: Activate through your Discover account, or log in here: activation link
- Latest activation timing: You only start earning 5% cash back after activation
- 5x rewards cap: 5% on the first $1,500 each quarter, then 1% thereafter
- When rewards post: After each statement closes
- Card details: [$50 bonus, Cashback Match] Discover IT
- Pros: No annual fee. For newly approved cardholders, the quarterly 5% cash back is doubled, effectively making it 10% quarterly cash back.
Chase Freedom
- Q1: Gas Stations at 5x (you can test whether gift cards purchased inside the attached convenience store also earn 5x); Internet/Cable/Phone Service (great for paying cell phone and internet bills, and if you cannot use it all at once you can overpay and use the credit over time); Mobile Payment: Apple Pay, Samsung Pay, Android Pay, and Chase Pay (since mobile payments work both online and in person, this category should be easy to max out). Must activate by March 14.
- Q2: Grocery stores, Chase Pay, and PayPal. Grocery stores are familiar territory for most people; aside from a few discount stores (Costco, Sam's Club, Walmart, Target), regular supermarkets and Chinese grocery stores generally qualify. Chase Pay still has a relatively narrow footprint and can mainly be used at Starbucks, Best Buy, and some websites. PayPal is much broader, with most websites supporting PayPal payments. PayPal also has a credit-card-funded send money feature. Although there is a fee, if you are unable to max out your 5x bonus naturally, sending money back and forth with friends can be a useful strategy. Chase specifically noted that money transfers can also earn 5x, and while the fee is a bit over 2%, it can still be worthwhile. 5x activation link
- Q3: Gas stations, Walgreen’s, and Lyft. Walgreen: Stores carry lots of third-party gift cards, as well as $500 Vanilla Visa gift cards and Amazon cards in various denominations. So if you are short on spending in other categories, using Walgreen gift cards to top off your spending is not a bad idea. Of course, buy gift cards rationally and with a plan—do not stockpile too many. Gas Station: Usually this means paying at the pump, but in practice it may also include the gas station convenience store. You can try buying a bottle of water to test it. Convenience stores may also sell Amazon and similar cards, but since Walgreen is already an option, there is really no need to take chances at a gas station. Lyft: Rideshare... not much to say. Activation starts on June 15.
- Q4: None yet. Activation starts on September 15.
- Quarterly 5x activation link: Chase Freedom official website
- Latest activation deadline: Activate by the 14th of the last month of each quarter, and all eligible purchases from that quarter made before activation can still earn 5x
- 5x cashback limit: 5x on the first $1,500 each quarter, then 1x after that
- When cashback posts: After each statement closes
- Card review:[Limited-time 17,500 signup bonus] Chase Freedom
- Pros: No annual fee. The 5x earnings are actually UR points. If you also have a premium Chase card, those points can be transferred to airline miles and hotel points, and can be redeemed for about 1.6c per point in value. That makes the quarterly 5x UR roughly equal to 8% cashback.
US Bank Cash+
- Quarterly 5% category of your choice: If you have other 5x credit cards, then in Q1 it may be better to choose cell phone (you can overpay), Bookstore (for back-to-school book purchases), or fast food (to cover part of your dining spend). Of course, it depends on your spending habits.
- Quarterly 5x activation link: US Bank official website
- Latest activation deadline: Unknown (readers who have this card are welcome to share data points)
- 5x cashback limit: 5x on the first $2,000 each quarter, then 1x after that
- When cashback posts: Unknown (readers who have this card are welcome to share data points)
- Card review: US Bank Cash+ credit card (no annual fee, $125 signup bonus, choose 2 categories for quarterly 5% cashback and 1 category for 2%)
- Pros: No annual fee. Flexible category selection makes category shifting possible.
Citi Dividend
- Q1: Gas Station: 5% (you can test whether buying gift cards inside the convenience store attached to a gas station also earns 5%), Car Rentals (this card does not offer rental car benefits, so if you have other cards it is still better to use one with built-in insurance for car rentals)（activation link）
- Q2: Home Depot and home furnishing store. If you need gift cards, Home Depot does carry quite a few third-party gift cards, such as Amazon. However, these stores do not seem to have the simple and direct $500 VGC option; they may have $100-200 denominations instead（activation link）
- Q3: Airline and Movie. Nothing especially exciting here, but if you need to buy winter break airfare and do not have another card with bonus rewards, 5% on this card is still decent. You probably will not spend that much on movie tickets anyway. Activate by September 30.
- Q4: None yet. Activate by December 31.
- Quarterly 5x activation link: Citi official activation link
- Latest activation deadline: You only start earning 5% cashback after activation
- 5x cashback limit: $300 total cashback per year, then 1% after that
- When cashback posts: After each statement closes
- Card review: Citi Dividend (no longer available for direct application, but it can still be obtained via product change)
- Pros: No annual fee. There is no quarterly cap, so if one quarter has especially strong 5% categories, you can max out the full $300 annual cashback in that quarter alone.
How to make the best use of these quarterly 5x categories
Regular credit card users
For regular credit card users, it is enough to know these 5x categories and carry the right card during the corresponding quarter.
Advanced credit card users
Because quarterly 5x cashback only applies during a specific quarter, even if you have all of the cards above, you still cannot cover year-round spending such as gas and groceries. In that case, you can use category shifting to turn other types of purchases into 5% cashback. For example, when Chase Freedom offers 5x at grocery stores in Q2, you can buy gas gift cards to use in later quarters, effectively getting 5x on gas for the rest of the year. The same idea applies to Citi Dividend in Q3: drugstores also sell gift cards for many other merchants, such as Amazon and eBay. In Q4, department stores such as Sears also sell many third-party gift cards, and Best Buy does too. Use gift cards as a bridge and try to earn 5% cashback on all your spending. For more detailed analysis, see:
- Credit card strategy — category shifting
- Summary of third-party gift cards sold by different merchants
MS users
- Gas stations: 711 may have Vanilla cards, and the in-store code may still code as gas station
- Drugstores (CVS, walgreen): PayPal My Cash and various Vanilla cards
- Sears, Bedbathbeyond, Best Buy: $200 Visa gift cards with PIN
For Dividend, drugstores are the best option because the fee is 1%.