Discover it® Cash Back Review: A Valuable Bonus Cash-Back Card

Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice, and in 2017 he received the SABEW Best in Business Award.

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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!

Discover it® Cash Back

Discover it® Cash Back

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Our Bottom Line

A clear cash-back leader with a laundry list of perks that reads like a novel. You’ll be hard pressed to find a competing card with a matching feature set and no annual fee.

What we Like:
  • Bonus cash back
  • No annual fee
  • 0% intro APR offer
  • FICO® Score for free
Key Scores:
5.0 5 Perks
4.0 5 Fees
5.0 5 APR
Perks 5.0/5
Fees 4.0/5
APR 5.0/5
  • Annual Fee: $0
  • Regular APR: 13.74% - 24.74% Variable
  • Intro APR: Purchases: 0.00%, 14 months Balance Transfers: 0.00%, 14 months
Highlights
  • 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.
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Rates & Fees

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.

Cash back match 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. Note, the go-to variable rate applies after the promo period expires.

0% intro APRs for balance transfers -- Offers a 0% intro APR on balance transfers for 14 months, 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. Note, the go-to variable rate applies after the promo period expires.

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.

FICO® Score for free -- 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.

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 could be improved

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 up to 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 its peers.

How Discover's cash-back calendar works

Bonus categories are based on Discover's cash back calendar, 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.

How to best use Discover it® Cash Back

  1. 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 cash back on a balance that carries a double-digit APR.
  2. Activate to get bonus rewards -- Without the 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.
  3. Cash in on the first-year match -- New cardholders can really rake it in. Because you receive a match on rewards earned in the first year, you can think of this card as offering up to double cash back on bonus categories and 2% cash back on everything else during the promotional period.
  4. Use it to monitor your credit score -- Discover offers access to a real FICO® 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.

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:

  1. 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.
  2. 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:

  1. Your name
  2. Your card design (pick your card’s color)
  3. Address
  4. Date of birth
  5. Social Security number
  6. Employment status and gross annual income
  7. 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.

  1. 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.
  2. You spend a lot in its bonus categories -- Given that Discover it® Cash Back’s bonus categories have included grocery stores, gas stations, Uber, Lyft, restaurants, and Amazon.com, spending heavily in them will be very easy for some to accomplish.
  3. You have another cash-back card -- This card is best used in tandem with another cash-back credit card for purchases outside of its bonus categories. 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 cash-back card to complement this one won’t be difficult.

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