As an avid user of cash back credit cards, I’m happy with my current credit card strategy, but it’s always good to strive for more, right? Here are three changes I wish the credit card industry would implement in 2025:
Have a question about credit cards? E-mail me at [email protected] and I’d be happy to help.
Higher bonus category spending caps
If I could make this first, second and third on my list, I would. It’s that important (and that much of a personal pet peeve).
Many credit cards that offer elevated rewards in certain spending categories have caps on how much you can earn. I admit that makes business sense, even though, as a consumer, I’d love to see those limits go away. My proposal isn’t that radical. I’d settle for the occasional inflation adjustment.
For instance, I love the 6 percent cash back I receive on grocery spending via the Blue Cash Preferred Card® from American Express. I don’t love that the earn rate drops to 1 percent after $6,000 in annual spending at U.S. supermarkets. That $6,000 threshold hasn’t changed since it was instituted in 2013. Indexed for inflation, $6,000 in 2013 equates to $8,218 today, according to USInflationCalculator.com.
Twelve years without an inflation adjustment is a long time, especially as inflation of all types and especially at grocery stores has been such a big kitchen-table economics issue these past few years. I would even be willing to pay a higher annual fee in exchange for a higher cap.
My yearly rewards on grocery purchases
My family of four spends about $12,000 on groceries each year. We get $360 in rewards (6 percent back) on the first $6,000 of that, thanks to the Blue Cash Preferred, and we pay a $95 annual fee. That’s $265 in profit (the card has other bonus categories such as 6 percent back on select streaming services and 3 percent back on gas, but for simplicity’s sake, I’ll just focus on groceries here).
If my family spends the other $6,000 on groceries with the Blue Cash Preferred, given the current limits, we only add $60 in rewards (1 percent). Netting $325 in rewards on $12,000 in spending isn’t a great return (2.7 percent). We actually do better than that because our Chase Freedom Flex® usually gives 5 percent back at grocery stores during one of the year’s four quarters (capped at $1,500 in bonus category spending; activation required; rewards drop to 1 percent back after the limit). And our Wells Fargo Active Cash® Card gives unlimited 2 percent cash rewards on all purchases.
My yearly rewards after doubling the grocery rewards cap
But let’s go back to the idea of Amex doubling the grocery rewards cap and also doubling the annual fee. Earning 6 percent back on $12,000 in grocery spending would be $720 in rewards. Even if we subtract a hypothetical $190 annual fee, we’d still net $530 in rewards.
As it stands now, we get $265 by maxing out the Blue Cash Preferred’s existing grocery limit (after subtracting the $95 annual fee), then $75 from the Freedom Flex’s typical grocery quarter and finally another $90 by putting the remaining $4,500 on the Active Cash. That’s $430 in rewards.
If Amex doubled the grocery rewards spending cap, we’d come out ahead by $100 even if we assume the annual fee doubled as well. There is actually a way that we can do this for ourselves right now, which would be if my wife and I each signed up for a Blue Cash Preferred in our own names. Mathematically, we probably should. I’m just reluctant to open another account and track another monthly bill and carry another card and tally when we should switch from one to the other. First-world problems, I know, but these stagnant rewards caps really bug me. It would be so much easier — and reasonable — if the limits were raised on existing customers.
And it’s not just Amex. The Chase Freedom Flex’s quarterly limit also works out to $6,000 over a full year; I’ve had that card for more than a decade and the limit hasn’t changed. The Discover it® Cash Back Card has a very similar structure which hasn’t changed in forever. And the Citi Custom Cash® Card puts a twist on the rotating categories game by switching it up every month according to your spending habits, but with a $500 monthly limit which works out to — surprise, surprise — $6,000 per year.
When was the last time an issuer raised a card’s spending cap?
I can’t remember the last time a credit card raised a category spending limit. It’s such a copycat industry; I really wish someone would make an inflation adjustment to spending caps like we see all the time for things such as Social Security benefits, income tax brackets and so on. Companies of all sorts are quick to pass along inflation adjustments in the form of higher prices. It’s past time they do so on the rewards side of the ledger. Okay, I’ll get off my soapbox now.
A 2 percent cash back card from American Express
My next wish is that American Express would join other major issuers in offering a card that gives 2 percent back on every purchase. Heck, Amex doesn’t even have a flat 1.5 percent back card anymore after pausing applications for the American Express Cash Magnet® Card*.
I have been an American Express customer for almost 15 years. Their top-notch customer service has earned them either the first or second position in the J.D. Power U.S. Credit Card Satisfaction Study every year since it began in 2007. They’ve topped the list more than anyone else, and I can vouch for their superior service. I also really like their mobile app experience, Amex Offers, the free ShopRunner membership that my card provides, their purchase protection benefit, extended warranty coverage and how they’re quicker to post transactions and payments than any other card issuer I’ve done business with.
If American Express offered a no-annual-fee 2 percent cash back card, I would sign up for it. Alas, they seem to be pulling back on their cash back offerings and their no-fee products. They’re doing very well in the travel rewards space and courting a lot of big spenders who are willing to pay hefty annual fees in exchange for various travel and everyday benefits, but I wish they would give us cash back lovers a little something more.
A flashy welcome bonus
It has been a while since a cash back card offered an eye-popping sign-up bonus. Right now, there are plenty of cards that will give new customers $200 or $250 after they spend anywhere from a few hundred to a few thousand dollars in their first few months with the card. That’s pretty good, but we’re thinking big, remember?
Travel cards often offer bigger bonuses, but again, what about us cash back folks? What would it take for a cash back card to offer, say, $500 to new customers? Similar to my aforementioned push for higher bonus category spending caps, I would even be willing to pay more for the privilege. For example, instead of getting $200 after spending $500 in three months (as some cash back cards currently offer), what if it were a $500 bonus after spending $2,000 in three months? That’s actually a lower return (in percentage terms) in the short term, but it’s more dollars, and I would be happy to make the trade if it was a card I liked for the long haul. If Amex offered a $500 bonus for a 2 percent cash back card? Sign me up.
Some existing business credit card offers are even more generous:
- Capital One Spark Cash: Earn $750 cash back after spending $7,500 in your first three months with the card. Get 2 percent back on most purchases (5 percent back on hotels and rental cars booked through Capital One Travel). There’s no annual fee the first year and a $95 per year after that.
- Ink Business Unlimited® Credit Card: $750 bonus after spending $6,000 within three months of account opening. Unlimited 1.5 percent back on purchases (5 percent back on Lyft rides through March 2025). There’s no annual fee.
Business credit cards often offer higher bonuses than consumer cards, in part because many businesses spend a lot more than your typical household. But not always — cards such as these are available to freelancers, gig workers and sole proprietors as well as larger, more established businesses. I’m not crazy to think that a consumer cash back card could offer $500 or more to new customers.
The bottom line
I would describe the current state of credit card offers as good but not great. We’ve seen better, and inflation has cut into consumers’ purchasing power. The proposals I’ve outlined here are equal parts realistic and aspirational. If card issuers are listening, I’d love to see these become a reality in 2025!
*The information about the American Express Cash Magnet® Card has been collected independently by Bankrate. The card details have not been reviewed or approved by the issuer.
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