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.
Discover it® Cash Back
Earn 5% cash back in rotating quarterly categories you activate ($1,500 quarterly spending cap), 1% back on all else
Purchases: 0%, 14 months
Balance Transfers: 0%, 14 months
11.99% - 22.99% Variable
Double cash back after the first year for new cardholders
5% bonus cash back -- Discover it® Cash Back pays 1% cash-back on regular purchases, and 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum ($1,500 of spending) each time you activate.
Cash back match in the first year -- Discover will match all the cash back earned during the first year for new cardholders, making it the highest cash back rate we've come across. Cardholders who max out bonus categories quarterly can expect a total of $600 cash back in the first year. For the number crunchers out there, that’s $1,500 of quarterly spending in bonus categories ($6,000 per year), which earns cash back at a 5% rate. Add Discover’s match on top, and you’ll receive $300, plus another $300 for the match in your first year -- that works out to 10% cash back.
$0 annual fee -- Credit cards packed with valuable features tend to charge high fees or APRs. Discover it® Cash Back balances this relationship well and doesn’t charge an annual fee, making it a great fit for cardholders with modest credit spending needs, who won’t see their rewards get wiped out by an annual fee.
0% intro APR for purchases -- The card includes a 0% intro APR for 14 months for purchases, after which the go-to variable rate applies.
0% intro APR for balance transfers -- The same length 0% intro APR applies for balance transfers, as does the go-to variable rate. Note, the promo period extends for 14 months from the first transfer, not from account opening, as is common for balance-transfer credit cards. Cardholders must execute the transfer by a specific date to qualify, but starting the clock from the date of the first transfer does increase the versatility of this card.
No foreign transaction fees -- Foreign transaction fees can quickly add up when whipping out credit cards for purchases abroad. Fortunately, the card has nixed the typical 3% foreign transaction fee many card issuers charge.
If you're carrying credit card debt, you can transfer your current balance to this card and pay down your total without accruing any interest. 0% APR for 14 months allows you to avoid interest charges and even improve your credit score fast. That's because your credit utilization (your debt divided by available credit) counts for 30% of your FICO® Score. Paying down debt can improve your score fast since those debt balances are reported monthly to determine your credit utilization and score.
You'll be hard pressed to find a no-annual-fee cash-back card that offers as much value as this card. That's because of the combination of the cards lucrative 5% cash rewards program, double cash back in the first year, long list of secondary perks, and cutting fees. Here's how the value adds up:
These three categories alone tally to $1,148 worth of value. Keep in mind that the value for many cardholders could be far higher, given the card doesn't include an annual fee, doesn't charge a foreign transaction fee, and you can avoid interest charges for 14 months on purchases and balance transfers.
Credit cards with rewards and 0% APR offers are excellent, but remember, they are a tool to help you get the most out of your spending. The Ascent motto to follow:
1.) Pay off your card in full each month.
2.) Choose a card whose rewards are a good fit for you.
3.) Don't spend more than you already would.
Follow this and you'll be making your money work overtime for you. Live richly, not risky.
When you apply for Discover it® Cash Back you should have a high likelihood for approval with good to excellent credit and a FICO® Score of at least 670. The higher your score the more likely to secure approval. Carrying a lower score can potentially earn you approval but it's a roll of the dice.
Simply put, this card is among the best cash-back cards we've come across. The card nicely balances costs with benefits, delivering a credit card that you may find worthy of a prime spot in your wallet, especially if you can maximize 5% bonus rewards categories while avoiding common credit card nuisance fees.
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*Average American budget per https://www.valuepenguin.com/average-household-budget. Includes the following categories earning 1% cash back: utilities and other household costs, healthcare, apparel and services, education, vices, miscellaneous, and personal care.
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