Rotating vs. Flat-Rate Cash Back: Which is Right for You?
When it comes to cash back credit cards, consumers typically face a choice between a flat-rate card, which offers a consistent reward on all spending, and a rotating category card, which offers a higher reward in specific categories that change quarterly. The right choice for you depends entirely on your spending habits and how much effort you want to put into maximizing rewards. This guide will help you compare these two strategies and decide which one best fits your financial lifestyle. While reward structures differ, redemption methods are often similar. For more information on redemption methods, read our guide on Cash Back Redemption: How to Get the Most from Your Rewards.
Before you decide on a flat-rate or rotating category card, it's a good idea to master the basics. If you're a beginner, start with our guide on Cash Back Cards for Beginners: The Best Options to Start with No Annual Fee.
For a comprehensive hub on cash back, explore our article on The Ultimate Guide to Cash Back Credit Cards.
What is a flat-rate cash back card?
A flat-rate card, such as the Citi Double Cash® Card, offers a single, consistent cash back percentage on all purchases. This removes the need for strategizing which card to use and when.Pros of a flat-rate card
Cons of a flat-rate card
What is a rotating category cash back card?
A rotating category card, such as the Chase Freedom Flex or Discover it® Cash Back, offers a high cash back percentage (often 5%) in specific categories that change every quarter, up to a spending cap.Pros of a rotating category card
Cons of a rotating category card
How to choose the right strategy for you
Choosing between a flat-rate and a rotating category card comes down to your personal preference and spending habits. When you choose a cash back card, you are likely focused on the rewards rate, but it's also smart to understand how rewards are treated by the IRS. For more details, read our guide on the Tax Implications of Credit Card Cash Back.An advanced strategy: Pairing your cash back cards
You don't have to choose one over the other. The most lucrative strategy for maximizing cash back is to pair a rotating category card with a flat-rate card.Related credit card articles
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Experian Boost: A Comprehensive Guide to Boosting Your Free Credit Score
FICO® Credit Scores
FICO® Score Ranges:
- Exceptional: 800–850
- Very Good: 740–799
- Good: 670–739
- Fair: 580–669
- Poor: 300–579
What is a Credit Score?
A credit score is a three-digit number, typically ranging from 300 to 850, that predicts your creditworthiness—how likely you are to repay borrowed money on time. Lenders use this score to assess the risk of lending to you and to determine the interest rates and terms of any credit you might receive.
Why is a Credit Score Important?
A credit score is important because it acts as your financial reputation. Lenders, landlords, insurers, and employers use this single number to quickly judge how reliable you are with money. A higher score helps you qualify for loans and credit cards, often securing lower interest rates that can save you significant money. Conversely, a poor credit score can lead to application denials or much higher costs for borrowing, making it a key factor in your overall financial opportunities.
FICO® Credit Score Facts
- Three-Digit Number: Like other credit scores, FICO® Scores are a three-digit number that summarizes a consumer's credit risk.
- Range: Most standard FICO® Scores range from 300 to 850. Higher scores indicate lower credit risk.
- Data Source: FICO® Scores are calculated using data from your credit reports maintained by the three major credit bureaus: Experian, Equifax, and TransUnion. Your score may vary slightly depending on which bureau's data is used.
- Industry Standard: Lenders rely on FICO® Scores for mortgages, auto loans, and credit cards because they provide a consistent, statistically sound assessment of the likelihood that a borrower will repay their debt.
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