Discover it® Cash Back Review: A Valuable Bonus Cash-Back Card
Discover it® Cash Back is a perfect card for rewards “optimizers,” people who have an affinity for scoring high rewards rates on their spending in specific categories. But it has value for more people than just rewards chasers, thanks to its 0% intro APR on purchases and balance transfers, too!
Great for: Bonus cash back and no annual fee Discover it® Cash Back
Our Bottom Line
A clear cash-back leader with a laundry list of perks, including double cash back in the first year and other essential wallet-friendly features like no annual fee.
Credit Rating Requirement:
What we Like:
- Bonus cash back
- No annual fee
- 0% intro APR offer
- FICO® Score for free
- Annual Fee: $0
- Regular APR: 14.24% - 25.24% Variable
- Intro APR: Purchases: 0%, 14 months Balance Transfers: 0%, 14 months
- INTRO OFFER: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
- Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate.
- Plus, earn unlimited 1% cash back on all other purchases - automatically.
- Redeem cash back any amount, any time. Rewards never expire.
- Use your rewards at Amazon.com checkout.
- Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
- No annual fee.
Why you can trust me
I’ve had a Discover card for more than 10 years, using it to score high rewards rates on spending in bonus categories. My experience with Discover suggests it may be one of the most underrated card issuers out there, offering robust rewards and features (like U.S.-based, 24/7 phone support) that go above and beyond “premium” cards that carry annual fees. In this review, I’ll explain how to get the most value out of Discover it® Cash Back from the perspective of someone who actually uses it.
What I like
5% bonus cash back -- This card’s killer feature is 5% bonus cash back on up to $1,500 of quarterly spending in rotating bonus categories (activation required each quarter). Cardholders who max out each of four categories in one year ($6,000 of total spending) would net $300 in cash-back rewards. All other spending, as well as spending in categories above $1,500 in any given quarter, earns at a normal 1% cash-back rate.
Double cash back in the first year -- Discover it® Cash Back offers a first-year match in which all the cash back you earn in year one is matched, effectively doubling your rewards in the first year. So, if you max out the bonus categories ($300 of rewards) and have another $5,000 of spending outside bonus categories ($50 of rewards), you’d earn $700 of total cash back in your first year ($350 plus $350 match).
0% intro APRs for purchases -- This card blends the features of a rewards card and a 0% intro APR card, offering 14 months of 0% APRs on purchases.
0% intro APRs for balance transfers -- Discover it® Cash Back offers a 0% intro APR on balance transfers, but you don’t have to use it immediately. The 0% intro APR kicks in on your first transfer, not from account opening, which gives you flexibility to use it on your own timeline.
No foreign transaction fees -- You can confidently use this card at home or abroad, thanks to the fact it doesn’t carry a foreign transaction fee. Many cards charge a 3% fee when making purchases internationally, which can add up to $60 on $2,000 of foreign spend when traveling or purchasing products from vendors who operate abroad.
No minimum redemptions -- Discover it® Cash Back offers redemption methods where you can redeem your rewards in amounts as little as $0.01. This makes it ideal for even smaller spenders, who might otherwise have to wait months to accrue enough rewards to top the $25 or $50 minimum redemption requirement of other rewards cards.
Free FICO® Score -- Many well-known websites and apps offer a free credit score, but none of them offer a true FICO® Score that lenders use to make credit decisions. Discover it® Cash Back cardholders get access to a real FICO® Score for free.
What could be improved
Automatic activation for 5% bonuses -- Like all other 5% bonus category cards, this card requires you to opt-in to bonus categories every quarter. If you don’t activate, any spending in the category will earn the ordinary base rate of 1% cash back. This is demanding a lot of this card -- it would be the only card that automatically pays 5% bonus cash back on categories -- but it tops my wish list.
Balance transfer fee -- This card offers a competitive 0% intro APR for 14 months on balance transfers, but it comes with a fee of 3%, for transfers made within 90 days of card opening, for each transfer. After the 90 day intro period, there is a 5% fee for balance transfers. In a perfect world, the card wouldn't have a fee, but it is worth noting the fee is competitive among it's peers.
How Discover's 5% cash-back calendar works
Bonus categories for Discover it® Cash Back change every quarter, but unlike competitors, namely, Chase Freedom®, this card gives you visibility into categories for the whole year instead of rolling them out one by one. Knowing what the next category will be is a real advantage for those who want to “plan” their spending to maximize their rewards.
|Months in 2019||5% bonus category|
|January through March||Grocery stores|
|April through June||Gas stations, Uber and Lyft|
|July through September||Restaurants and PayPal|
|October through December||Amazon.com, Target, and Walmart.com|
For example, cardholders who have activated their cash back for a quarter will automatically accrue 5% bonus cash back on spending in certain bonus categories. So, if you activate it in the fourth quarter, you’ll earn 5% cash back on up to $1,500 of spending at Amazon.com, after which you’ll accrue rewards at the base rate of 1%.
Discover it® Cash Back categories
Recently, Discover it® Cash Back categories have been tweaked from year to year, but any changes have arguably been for the better of its cardholders. Although all its categories are popular, cardholders seem to love its fourth-quarter categories, which almost always include Amazon and other merchants where cardholders are likely to spend in the busy holiday gift-giving period.
For example, in the fourth quarter of 2017, Discover it® Cash Back paid 5% bonus cash back on spending at Amazon and Target. In 2018, it was Amazon and wholesale clubs. In 2019, it will pay 5% bonus cash back at Amazon again as well as Target and Walmart.com.
The value proposition has been improved in the last two years as grocery stores were a category for one quarter in each of 2018 and 2019. Since many families spend heavily at grocery stores throughout the year, it’s easy to get a lot of value out of the grocery category when it comes around.
How to best use Discover it® Cash Back
- Avoid carrying a balance -- Unless you’re making use of its 0% intro APR on purchases or balance transfers, don’t make a habit of carrying a balance. As with any rewards card, just a few months of interest on a balance can erase all of the rewards you earn on your spend. It doesn’t make sense to earn 1% to 5% cash back on a balance that carries a double-digit APR.
- Activate to get bonus rewards -- Without the 5% bonus categories, Discover it® Cash Back is a bottom-tier cash-back card, since it only offers a base rate of 1%. Set up reminders to log-in and activate bonus rewards so you don’t miss out.
- Cash in on the first-year match -- New cardholders can really rake it in with Discover it® Cash Back, which offers a match on all rewards earned in the first year of having the card. Because you receive a match on rewards earned in the first year, you can think of this card as offering 10% cash back on bonus categories and 2% cash back on everything else during the promotional period.
- Use it to monitor your credit score -- Discover offers access to a real FICO credit score for free. Getting access to a real FICO® Score, not a simulation of your credit score that many apps offer, ordinarily costs real money. For instance, myFICO charges upwards of $350 per year to get a real FICO® Score. You get access to a real score for free, just for having the card.
- Double dip -- After your first year, when your cash back is no longer matched, you may want to reserve this card for bonus category spending only. For all other purchases, the best cash-back credit cards offer 1.5% to 2% rewards yields, making them better suited for spending outside bonus categories.
How to activate Discover it® Cash Back rewards
Though Discover it® Cash Back requires that you activate bonus rewards each quarter, it doesn’t require a lot of time or effort. There are two easy ways to activate bonus cash back each quarter:
- Log into your account online -- Once you’re logged in to your online account, simply click on a link to activate your bonus cash back for the quarter. It’s that easy.
- Phone in -- If you’re on the move, it may be easier to activate bonus cash back by calling 1-800-DISCOVER to ask that a customer service representative activates your bonus cash back for the quarter. Discover offers 24/7 live help by phone, staffed by people in the United States, which makes its phone support a breeze compared to other card issuers.
The key is being diligent about activating your card for the category bonuses once every three months. An easy way to do this is to set up a reminder to log into your account and activate it near the end of March, June, September, and December, so that you never miss any bonuses on any of your spending.
Applying for Discover credit cards
Relative to other card issuers, Discover is known to be slightly less demanding of its applicants, approving customers with lower incomes or FICO® Scores. For this reason, it’s a good card issuer for people who might not have years of credit history or who are just getting started in cash-back cards.
That isn’t to say that people who have high incomes or excellent credit should go elsewhere, though. Discover’s category cards are some of the most rewarding out there, particularly for people who “double dip” by using Discover it® Cash Back for spending in bonus categories, and other cards for spending in non-bonus categories.
When applying, you’ll be asked for some key information required to apply including:
- Your name
- Your card design (pick your card’s color)
- Date of birth
- Social Security number
- Employment status and gross annual income
- Monthly housing or rent payments
After you submit your application, you may be instantly approved for Discover it® Cash Back. In some cases, Discover may tell you that it will take seven to 10 days to notify you by mail of its decision. That’s not necessarily a denial -- sometimes it’s as simple as a database saying you live on “Maple Avenue” instead of “Maple Street.”
If you’re denied for the card, an issuer is required to explain why, and give you the credit scores it used to make its decision. You can also call in for reconsideration, which can sometimes turn an initial denial into approval.
Data points suggest approvals roll in most frequently for people who have a credit score in the upper 600 range or better, though even a perfect credit score can result in a denial if you have low income and high monthly payments on a mortgage, rent, or other debts.
This card is right for you if...
It’s hard to beat Discover it® Cash Back as a category bonus card, given it offers one of the highest bonus cash-back rewards rates you’ll find with any credit card. If the following statements apply to you, you’re likely a good candidate to apply for it.
- You don’t mind extra work to earn bonus rewards -- To get the most value from this card, you must remember to activate your bonus categories every quarter. It only takes a minute or two, but if you’re forgetful, this alone might be reason to go with another card that offers less cash back with fewer strings attached.
- You spend a lot in its bonus categories -- Given that Discover it® Cash Back’s bonus categories include grocery stores, gas stations, Uber, Lyft, restaurants, and Amazon.com, spending heavily in them will be very easy for some to accomplish.
- You have another cash-back card -- This card is best used in tandem with another cash-back credit card because outside of its bonus categories, it isn’t that rewarding. Use Discover it® Cash Back for all your spending in bonus categories, and put other spend on a credit card that offers more than its 1% base rate on other types of spend. Numerous cards offer 1.5% to 2% cash back on all your spending, so finding a card to complement this one won’t be difficult.