Biren Shah

Is 4% the New 2%?

Biren Shah -

Having managed a card rewards program at Extra, I like to keep an eye on the latest offers just to see how the industry is evolving. Something seems to have changed in 2025. I don't know enough to say why, but a whole slew of companies are starting to offer 4% and 5% rewards programs.

That's pretty crazy, since the best I could find before now was 2% (excluding programs that required constant maintenance like rotating categories, promotions requiring activation, etc.).

Given the changes, I'm flipping my credit cards around, and I thought maybe other people would be interested. Here's the outcome for how we'll be using credit cards going forward:

  • Target Debit card for purchases at Target (5% discount)
  • Amazon Prime Visa for purchases at Amazon, Whole Foods, and Audible
    • 5% Cash Back (via a points system ) with a Prime membership
  • AAA Daily Advantage Visa for purchases at grocery stores (5% up to $500, i.e. $10k of spend--credited by MCC Code)
    • Walmart Superstores should count as grocery stores
  • Costco Visa for gas purchases at Costco (5% cash back via rewards voucher)
  • Marriot Bonvoy Brilliant American Express for hotels (will discuss rewards below)
  • US Bank Smartly Credit Card for everything else (4% cash back, if you keep a minimum balance there)

This system is designed to maximize rewards while minimizing confusion. Before this, my wife and I were constantly confused about which card to use. Do we want airline points? Hotel points? Cash back?

The problem is that almost all rewards points systems suck compared to 2% cash back (and 4% cash back blows them out of the water). So the US Bank card lets us set a great default (use this unless you have a good reason), and the other options are tied specifically to the store we're shopping at anyway. Easy.

The Marriot Bonvoy is the one place where I moved away from strict rewards rate maximization. That card also has a heft annual fee of $650. Here's why we decided to go for it (note that I'm using a conversion rate of $0.007 to 1 point to estimate values):

  1. They're having an 185k bonus points promo (worth $1295)
  2. The free night rewards allow you to book rooms that cost up to 85k points (vs only 30k points for the Boundless card we currently have). That makes this perk worth $350 for every free night used.
  3. You get up to $25 per month as a statement credit on dining
  4. You get 6x points for booking Marriot hotels directly (rewards rate of 4.4%)
  5. You get Elite status and 4pm late checkout

The perks of this card don't directly translate to rewards rates very well. Plus, there's the $650 annual fee to get over. But given that a "getaway" for me and my wife right now means a weekend at a hotel without the kids--these perks seem pretty awesome.

That's the system I'm personally going to be using. I'm actually pretty shocked to find these offers. I wonder if they'll last.