No single cash back card pays the top rate on everything you buy. Pair a category card that pays extra where you spend the most, such as groceries or dining, with a no-fee card that pays a flat 2% everywhere, and put every purchase on whichever card pays more for it.
A category card pays a high rate in a few places and often just 1% everywhere else. A flat-rate card pays the same 2% at the supermarket as it does at the hardware store.
Take the Blue Cash Preferred Card from American Express. It pays 6% on the first $6,000 you spend at U.S. supermarkets each year and 1% on purchases outside its bonus categories. The annual fee is $95 after the first year. Pair it with a no-annual-fee card that pays 2% on every purchase, such as the Wells Fargo Active Cash or the Citi Double Cash.
Say you spend $500 a month at the supermarket and $1,500 a month outside the Blue Cash Preferred’s bonus categories. By our math, the pair earns $720 a year, or $625 after the fee. The 2% card alone earns $480, and the Blue Cash Preferred alone nets $445.
Pick the category card from your own statements. Total the last three months by category, and match a card to the biggest one. A household that eats out more than it cooks is better served by the Capital One Savor, which pays 3% on dining, entertainment, popular streaming services, and grocery stores, with no annual fee.
Read the fine print on where the bonus applies. The Savor’s grocery rate excludes superstores like Walmart and Target. The Blue Cash Preferred’s 6% drops to 1% once you pass $6,000 in supermarket purchases for the year, so move groceries to the 2% card at that point.
Keep the 2% card as your default for everything else, including bills on autopay, and pay both balances in full each month. Interest on a carried balance wipes out the extra rewards.
Recheck the pair once a year. When your biggest category changes or an issuer cuts a rate, the card that earns the spot changes too.
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