AddUp Rewards

Credit Card Rewards: Category Coverage

by Shane Jacobeen
Credit Card Rewards: Category Coverage
Given the wide variety of credit card rewards, figuring out how which card(s) are best for you can be challenging. One effective strategy for optimizing your credit card rewards is to align your purchases with categories for which your cards offer extra rewards. 

The Problem

Consider this example: imagine your monthly spending falls into the following categories:

  • Travel
  • Groceries
  • Gas stations
  • Internet and phone bills
  • Streaming services
  • Other

If you used a credit card that offers extra rewards for travel purchases to buy airline tickets, great! But if that’s the only rewards card you own and it doesn’t offer rewards in any of your other spend categories, you are not earning anything above the base reward rate for any of your other purchases

  • Travel – Covered!
  • Groceries – not covered
  • Gas stations – not covered
  • Internet and phone bills – not covered
  • Streaming services – not covered
  • Other – not covered

This is a big missed opportunity, as there are lots of credit cards that offer additional rewards for most of these categories.

The Solution

So how can you tap into those unearned rewards for your monthly expenses? The key is to increase your category coverage – that is, to align your purchases with the categories for which that you earn the most rewards. If your spending cannot be adjusted to fit into categories for which you already have coverage, it may be time to explore adding a new credit card or two. While some cards have multiple bonus reward categories, it’s not likely that one card will cover the majority of your spending.

There’s no one-size-fits-all solution to maximizing your category coverage, because the your category prioritization depends entirely on your shopping habits. For example, someone who travels regularly and someone who spends a lot on groceries will likely have different spending habits and reward priorities.

To return to our previous scenario, if had an additional credit card that offered bonus rewards for gas station and grocery purchases, and another one that offered extra rewards for internet and phone bills, your category coverage would be much improved:

  • Travel – Covered!
  • Groceries – Covered!
  • Gas stations – Covered!
  • Internet and phone bills – Covered!
  • Streaming services – Covered!
  • Other – not covered

Depending on your spending habits and card specifics, this improved category coverage can translate to significant reward earnings.

Increasing your category coverage can be a very effective way to maximize your rewards. Of course, there are other factors to evaluate before applying for a new card – for example, annual fees and other card features such as APR are important to consider. But if you are interested in earning more rewards for your everyday purchases, increasing your category coverage can be a very effective strategy.