Stop the Switch: Personalized Cash Back Is Now the Cost of Staying Competitive

By: Sarah Langmead, Strategy Director

Credit card loyalty is eroding fast: Nearly three-quarters of satisfied cardholders are planning to look for a new card in 2026.¹ To stay competitive, issuers are pushing harder on innovation, especially when it comes to rewards, because consumers increasingly want cash back options tailored to their real spending patterns.

Traditional Banks Have Been Pioneering Personalized Rewards

In recent years, a handful of traditional banks have begun to separate themselves from the pack by letting cardholders customize their top cash back categories for greater earning power. A few top examples are:

• Bank of America’s (BofA) Customized Cash Rewards Credit Card allows cardholders to select their own 3% category (among six categories) once per calendar month, with rewards capped at $2,500 quarterly, and provides other cash back perks. The card fits an evident need in the market – an August 2025 survey from eMarketer found that 27% of respondents thought earning rotating rewards based on categories they chose would be “extremely valuable.”¹ Last summer, BofA upped the ante by introducing its richest intro offer yet: the ability for new cardholders to earn double cash back (or 6%) in a category of their choice during their first year of card ownership.²

  
  

• Similarly, U.S. Bank’s Cash+ Visa Signature Card offers cardholders 5% cash back on their first $2,000 in combined eligible purchases each quarter on two categories they choose (from a list of 12). On top of that, cardholders earn 2% cash back in an “everyday” category and get other cash back benefits.³ However, there is a catch – to take advantage of these high rates, cardholders must opt in to their 5% and 2% bonus categories each quarter to earn the higher rewards rates; otherwise, they will earn only 1% back on all purchases.⁴ 

  
  

• Smaller issuers like TD Bank have also hopped on the “choose your own top rewards” category trend in recent years. TD Bank’s Cash Credit Card allows cardholders to choose their top two spend categories (from a list of five) to earn unlimited 3% and 2% cash back on, respectively, as well as gives them unlimited 1% cash back on all other eligible purchases. Unlike with U.S. Bank’s Cash+ Card, if cardholders do not select categories at the start of a new quarter, they are defaulted to receiving 3% cash back on eligible dining and 2% cash back on eligible grocery purchases. To emphasize this value, TD’s Cash Credit Card acquisition campaigns often cleverly encourage prospective cardholders to “Go ahead. Be choosy.”⁵

Artificial Intelligence Is Expected to Amplify Personalized Rewards in 2026

Traditional banks may be making progress, but fintechs are quickly raising the bar. Many are already using generative AI (GenAI), a type of artificial intelligence that “learns” from existing data and uses that knowledge to create new content in order to personalize rewards bundles that complement cardholders’ real-time habits. By combining permissioned data (like SKU-level receipts) with app behavior and merchant signals, GenAI can create reward options that truly fit every individual and execute them at a scale that we have never seen before.⁶

These advancements may still be in their early days, but AI is likely to start powering optimally personalized rewards much sooner than many expect. When it does, traditional banks will likely be up against more competition than they have ever seen. Pragmatic is here to help! Our team brings deep credit card marketing expertise to help issuers tackle what’s coming next and refine their rewards programs to stay ahead of the competition.

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¹ eMarketer – “U.S. Cash-Back Credit Card Emerging Features Benchmark 2025” (October 10, 2025) ² Bank of America Newsroom – “BofA Boosts CashBack for New Cash Rewards Credit Cardholders” (May 16, 2025)

³ U.S. Bank

⁴ NerdWallet – “U.S. Bank Cash+ Review: 5% Cash Back You Can Customize” (December 10, 2025)

⁵ Competiscan

⁶ eMarketer – “Payments Trends to Watch in 2026” (December 3, 2025)