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Post: : Inflation remains near a 40-year high. Here’s the unpleasant thing that’s doing to your credit card rewards (and what you can do about it)

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Inflation is impacting a lot of things negatively these days — your grocery bill, your gas receipts, and something else you might not have considered: your credit card rewards.

Indeed, many credit card rewards programs have spending caps, and inflation-driven high prices mean you hit those caps a lot sooner than you might have otherwise. “Your weighted average rewards are lower because it’s easier to hit the spending cap and then additional spending earns lesser rewards, such as dropping from 5% cash back to 1% beyond the limit,” says Ted Rossman, senior industry analyst at CreditCards.com. 

Matt Schulz, chief credit analyst at LendingTree, says: “That’s especially true at the grocery store. The American Express Blue Cash Preferred offers a very strong 6% cash back on grocery purchases up to $6,000 per year, which is $500 [per month] in grocery spending,” says Matt Schulz, chief credit analyst at LendingTree. Even before inflation took hold, many American families were spending that much each month on groceries and now even more are. “This means many Americans aren’t getting as much bang for their buck with their credit card as they once did and that’s the last thing anyone needs in a time of super-high inflation,” says Schulz.

How to combat inflation eating into your credit card rewards

“One way around this is to have multiple credit cards so you can switch over to a new card once you’ve maxed out the spending cap in a certain category on another card,” says money saving expert Andrea Woroch. Though, of course, you must pay your bill in full and on time each month.

When comparing cards, “factor in the amount as well as the timeframe. For instance, a $500 monthly cap and a $6,000 annual cap both work out to $6,000 over 12 months, however, if your spending is lumpy, the annual cap would be preferable,” says Rossman. If you have a month when you spend $1,000 in that category and another when you spend $0, you’ll fare better with an annual cap versus a monthly cap that you might exceed some months and undershoot in others.

As for the cards with the highest spending caps, Rossman highlights the American Express Gold Card for groceries, which gives 4x points on up to $25,000 in annual spending at US supermarkets. And some cards don’t have spending caps at all. If you spend a lot on gas, the PenFed Platinum Rewards Visa Signature card might be your best choice, says Rossman, since it gives an uncapped 5x points at gas pumps. “Lower spenders could earn more value with a card like the Sam’s Club Mastercard but its 5% cash back is capped at $6,000 in annual gas spending,” says Rossman.

Keep in mind though, some of the credit cards with the best rewards offers and highest spending caps usually require good credit. “Spend time improving your credit score so you can qualify for one of the most robust programs,” says Woroch. And know that rewards aren’t worth it if you’re also paying interest on the cards. 

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