A 5% cash-back rate sounds like it must beat a 2% rate. The asterisk that destroys the math is the cap: bonus categories typically expire after $1,500 of spend per quarter, after which you earn 1% — less than the flat-rate card.
Where the Cap Bites
A standard rotating card pays 5% on up to $1,500 of bonus-category spending per quarter, then 1% above the cap. That is $6,000 of bonus spending per year, capped at $300 in cash back. After that, every dollar earns 1%.
If your grocery spending is $1,000/month, you hit the $1,500 cap in the first six weeks of the quarter. The rest of the quarter, the bonus card pays you 1% on groceries — less than the 2% flat-rate card on the same purchases.
The "I’ll Switch Cards" Trap
In theory you can use the bonus card up to the cap and switch to the flat-rate card after. In practice, splitting category spending requires checking dollar totals before every swipe. Few people sustain this for an entire year.
Combining for Earners
For heavy spenders, the answer is two cards: bonus card for predictable category spending up to the cap, flat-rate card for everything else. If you do not want to manage two cards, the flat 2% is the no-brainer.
The 5%/2% comparison is not "5 vs 2" — it is "5 up to a cap, then 1 vs 2 across everything." Once you account for the cap and the average household’s ability to track it, the flat-rate card frequently outperforms.
