By Anna Behe, Director, Research & Insights
Credit card issuers have consistently faced the challenge of delivering high-value cash back rewards while controlling costs, sustaining cardholder engagement, and maintaining program simplicity.
To address these competing priorities, issuers have experimented with various reward structures. One prominent approach has been rotating bonus categories. Cards such as Discover it and Chase Freedom Flex offer elevated rewards (5% cash back) on rotating categories but require cardholders to activate the categories each quarter. In addition, the issuers determine the categories themselves, limiting consumer control. While effective in driving engagement, the rewards structure presents pain points for consumers, as they must enroll and some categories may not align with their spending habits.
The Citi Custom Cash Card, launched in 2021, directly addressed those consumer pain points. Instead of requiring activation or category selection, the card automatically awarded 5% cash back in the cardholder’s highest eligible spending category each billing cycle. This eliminated the need for manual enrollment, creating a “set-it-and-forget-it” experience.
In the Custom Cash launch marketing, Citi explicitly called out category enrollment: “best of all, there are no rotating categories to sign up for…” They also emphasized how cards should reward “you for who you are and what you do” and shouldn’t be “one size-fits-all.”
Despite this simple and high-value structure, Citi stopped accepting new applications for the card in May 2026. Shortly after Citi Custom Cash was discontinued, Chime announced changes to its own credit card cash back program. Beginning July 1, 2026, Chime will require cardholders to reselect their 5% bonus category each month, as previously selected categories will no longer roll over automatically. If no selections are made, cardholders will not earn elevated cash back.
Taken together, these developments highlight a broader shift in the cash back landscape. The discontinuation of Citi Custom Cash for new applicants and Chime’s move away from automatic rollovers suggest that passive, auto-enrolled reward structures may be difficult for issuers to sustain. At the same time, monthly or quarterly enrollment requirements introduce friction that can diminish the user experience.
Unfortunately, this commentary does not end with an outline of a rewards program that balances high value with simplicity while meeting profitability requirements. However, it does end with thought starters for issuers whose rewards programs require active participation:
– Use behavioral nudges to drive activation. Motivate action by highlighting missed value, as consumers are more driven to avoid losses than to achieve gains. (e.g., “Earn 5% instead of 1%” or “You could have earned $25 in rewards last quarter”)
– Leverage dopamine-driven engagement strategies. Celebrate progress and achievements, gamify rewards, and build anticipation. For example, if a cardholder activates categories for three consecutive quarters, they could unlock additional cash back.
-Increase the personalization of rewards. Explore tailoring categories to individual spending behavior to increase cardholders’ motivation to engage. For example, allow cardholders to select themed category bundles, such as “everyday essentials,” “travel,” or “entertainment.”