With the holiday shopping season now in full swing, it's time for those with rewards credit cards to take full advantage of their cash back, points and miles. Many Chase, Citi and Discover customers have plastic that comes with bonus spending categories that change each quarter. If you're one of them, you can earn 5-percent cash back on spending in current categories, but you have to remember two things:

  1. You must register anew each quarter in order to be eligible.
  2. You only stand to earn the bonus 5 percent (as opposed to your standard earning rate) on an amount that's capped by your card issuer. The caps quoted below are correct at the time of writing, but companies may reserve the right to amend them, and you should check their websites before relying on information provided here.

Chase cash back credit cards and bonus categories

Chase currently caps the amount you can spend in bonus categories at $1,500 in any one quarter. Anything over that -- along with purchases outside the categories -- attracts a more modest 1 percent. During the 2012 holiday season (Oct.1 - Dec. 31), the categories are:

  • Airline tickets purchased directly from the airline.
  • Hotel accommodation purchased directly from the hotel.
  • Purchases made in Best Buy and Kohl's.

Interestingly, Chase says in an email sent to IndexCreditCards.com: "...unlike other 5 percent cash back rewards programs, Chase Freedom cardholders can earn cash back retroactively -- so those who enroll late in the quarter will still earn 5 percent cash back on the purchases they've already made." However, the company's relevant web page says "Activate by December 14th, 2012," so it might be safer to get in before that apparent deadline.

The bonus categories slated for 2013 are:

  • January - March: gas stations, drug stores and Starbucks
  • April - June: restaurants and movie theaters
  • July - September: gas stations, theme parks and Kohl's
  • October - December: Amazon.com and select department stores

Citi cash back credit cards and bonus categories

Citi's web site seems less forthcoming about its bonus rewards categories. Sure, the current quarter's ones are there (Macy's, electronics stores and toy stores), but beyond that there's just a reminder to "stay tuned" for future categories.

If there's any mention of quarterly spending caps, it's not easy to find. However, there's certainly one on annual earnings, at least for those who haven't received an offer exempting them from it: you may earn earn a maximum of $300 cash back in any one calendar year.

Discover cash back credit cards and bonus categories

Like Chase, Discover caps spending in bonus categories at $1,500 a quarter. You can still, at the time of writing (December 10), register for the current categories (department stores and online shopping) although you have to click on a future quarter in order to get the "Sign Up Now" button to appear. That means you should be able to get your 5 percent cash back for spending between today and Dec. 31, but it seems unlikely you're going to be eligible for Chase-style retrospective earnings.

You can already register for Discover's next-quarter promotion. Registration is routinely open from the first day of the month preceding each quarter.

Discover's cash-back bonus categories for 2013 are:

  • January - March: restaurants and movies
  • April - June: Spring style
  • July - September: Summer fun
  • October - December: Holiday shopping

It's worth noting that Discover's standard 1 percent earning rate only kicks in after you've spent $3,000 in annual purchases. Below that, you're only getting 0.25 percent, which is pretty mean. What's even more mean is that purchases you make in bonus categories don't count toward that $3K threshold.

Rewards credit cards and the golden rule

The golden rule, which applies during the holiday season and throughout the year, is not to use rewards credit cards unless you plan to pay down your balance very quickly. On average, they come with higher interest rates than non-rewards cards, and these can quickly eat up the benefits you may get from cash back, points and rewards.

Instead, use low interest credit cards for purchases that are likely to take you a while to pay down.

The original article can be found at IndexCreditCards.com:
Rewards credit cards' bonus spending categories for holiday shopping and beyond