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Update: You can find the updated bonus categories for 2016 here.
When it comes to maximizing credit card spending, it pays to know which cards offer bonus points when you use them at specific merchants. Among the best of these bonuses are the 5% quarterly rotating categories of the Chase Freedom and Discover It cards.
Each of these cards offers 5x points or 5% cash back per $1 on up to $1,500 worth of purchases at specific merchants or categories of merchants. These bonus merchant categories change every quarter (so four times per year). Now that we are well into January 2015, the first quarter of the new year has commenced, and with it comes new earning possibilities with both of these cards.
Chase Freedom: Grocery Stores, Movie Theaters, Starbucks
Q 1 (January 1 – March 31): Grocery stores, movie theaters and Starbucks
Q 2 (April 1 – June 30): Restaurants and more
Q 3 (July 1 – September 30): Gas stations and more
Q 4 (October 1 – December 31): Amazon.com and more
As a note, the grocery stores in Q1 specifically exclude Target and Walmart. In order to earn the bonus points on your purchases, you must activate your card each quarter. You can find out how to do so here, but the easiest ways are online at the 5% calendar page, by calling Chase customer service, or at a Chase ATM.
The deadline for activating your card to earn this quarter’s bonuses is March 14, 2015. If you do so by then, Chase will retroactively credit all eligible purchases with the 5x earning, but it is probably better just to activate now so you do not forget and possibly miss out on this earning potential.
As a reminder, the current sign-up bonus on the Chase Freedom card is 10,000 points when you make $500 in purchases in the first 3 months, and a $25 bonus after you add your first authorized user and make a purchase within the same 3-month period.
You can redeem points for cash back (10,000 points = $100, so that sign-up bonus is a 20% return on your spending), or you can transfer them to your Ultimate Rewards account if you have the Chase Sapphire Preferred or Ink Plus, and then transfer them to travel partners like Southwest, Hyatt, and United.
I value Ultimate Rewards points at 2.1 cents apiece if you have one of those premium cards as well, so the 10,000 point sign-up bonus is worth $210 in travel rewards. If you max out the 5% bonus categories with your Chase Freedom card and earn the full 30,000 bonus points in the year ($6,000 for all four quarters multiplied by 5x points), you could get another $630 in value. That’s a pretty great earning potential for a card with no annual fee!
Discover It: Gas & Ground Transportation
Q 1 (January 1 – March 31): Gas & Ground Transportation
Q 2 (April 1 – June 30): Food & Fun
Q 3 (July 1 – September 30): Summer Spruce Up & More
Q 4 (October 1 – December 31): Holiday Shopping & More
So as you can see, there are a few vague “& More” categories up there that we should learn more about as the year progresses. However, for Q1, the categories are delineated as:
- Stand-alone gas stations
- Ground Transportation: local and suburban commuter transportation including ferries, passenger railways, taxicabs, limousines, rental cars, charter/tour bus lines (not including those purchased through travel agencies or aggregator sites)
So ground transportation is a pretty broad category, though it would be pretty easy to rack up $1,500 in gas purchases, even with prices dropping..
The Discover It is not currently offering a sign-up bonus, but you earn 5% back on these categories, 1% back on everyday purchases, and it has other great features like no annual fee, no over-limit fees and no foreign transaction fees. Discover points are straight-up cash-back currency which you can redeem in the following ways:
- Direct deposit straight into your bank account
- Statement credit to your Discover card account
- Pay with cash back bonus to shop with Discover partners like Amazon.com and iTunes.
What’s nice is that, even if you have both cards, there usually is not too much overlap in their bonus categories. The exception this year will be Q2’s restaurants, but hopefully there will be other merchants included as more of the 5x earning calendars are released by both issuers.
Have either of these cards? Where do you plan to plan to earn your 5% category bonuses?
For more information, see these posts:
- Maximizing Credit Card Bonus Categories To Earn More Points
- Ranking the Top Cash-Back Credit Cards
- Quarterly 5% Bonus Categories: Chase Freedom & Discover It
- Top Credit Card Offers with No Annual Fee
It's a stellar Cash Back card on its own, but when paired with the Chase Sapphire Reserve or Chase Sapphire Preferred, the Freedom's 5x Category Bonuses let you rack up Chase Ultimate Rewards Points, transferrable to partners or redeemable via the portal.
- Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
- Unlimited 1% cash back on all other purchases — it's automatic
- 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 15.49-24.24%. Balance transfer fee is 5% of the amount transferred, $5 minimum
- Enjoy new 5% categories every 3 months
- Cash Back rewards do not expire as long as your account is open
- No annual fee