Guides · Staying on top of it
Bonus caps: why your 5% card sometimes earns 1%
2 min read
Many rewards cards advertise a high rate on certain categories. The fine print usually adds a limit on how much spending earns that rate.
How caps work
A bonus cap is a ceiling on the spending that earns a card's elevated rate. A common structure is 5% back on up to $1,500 in combined purchases in a bonus category each quarter. Once you pass the cap, the same purchases earn the card's base rate, often 1%, until the period resets.
Caps can reset quarterly, annually or on your card anniversary, and some cards share one cap across several categories. Cards with rotating quarterly categories often also require you to activate the bonus each quarter before it applies. See Rotating categories.
Why it matters
Say you've already spent $1,500 at grocery stores this quarter on a card that pays 5% up to that limit. Your next $100 grocery run earns $1 instead of $5. A flat-rate card earning 2% on everything would have paid $2, twice as much, on the very purchase you'd expect your “grocery card” to win.
Because the cap is invisible at the register, it's easy to keep using the bonus card long after it has stopped being the best choice.
How to plan around caps
- Know your limits. Write down each card's cap, the period it covers and when it resets.
- Activate on time. If a card has rotating categories, set a reminder for the start of each quarter.
- Watch your progress. Your card's app or online account usually shows spending in the bonus category.
- Keep a fallback. A good flat-rate card is the right choice once a bonus is used up.