Discover It Cash Back Credit Card Review

Full Review of Discover It Cash Back Credit Card

Pros Explained

• Outstanding Cash Back Rewards on Select Categories: Cardholders can earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Few cards offer such a generous cash back rewards rate, albeit on select and rotating categories. However, the categories are typically broad and easy to take advantage of. On other purchases, you receive a fairly standard 1% in cash back.
• Cash Back for Your First Year With the Card is Matched: At the end of the first year of card ownership, Discover automatically matches all of the cash back you've earned. You don't need to register for the bonus, and there's no limit on how much you can earn through it. This perk could lead to a substantial boost to your first year’s annual rewards, especially if you're able to maximize your spending in the rotating categories each quarter.
• Decent 0% Introductory Offer on Purchases and Balance Transfers: This card offers an intro fee of 3% of the amount of each transfer for transfers that post to your account by August 10, 2023, with the 0% intro APR balance transfer offer described above. After that, 5% of the amount of each transfer. That’s not an outstanding length of time compared with other transfer offers in the market. But this bonus has two other advantages over some competing deals. Unlike some offers, it isn't limited to only balance transfers, but includes new purchases as well. The 0% APR balance transfer offer must be initiated in during the eligibility period to qualify.

Cons Explained

• High-Rate Categories Must Be Activated: This card requires you to activate the rotating categories each quarter in order to earn 5% rewards. Though the issuer makes it relatively simple to do so via its website, mobile app, or over the phone, it's still a chore that you may forget or be too busy to do. If you neglect to activate the bonus, you'll earn only 1% on purchases, including those in the bonus categories.
• Relatively Few Benefits: Beyond its rewards, the Discover it Cash Back has limited perks. Other cards—even those with no annual fees—may offer a number of robust benefits, including rental-car insurance coverage, travel insurance, and extended warranty protection. You may also want to carry another card for select purchases where you require these and other extras.

Who This Card Is Best For

If you're willing to put in some effort to earn top rewards—as in monitor and register for those with 5% cash back—the Discover It Cash back card can be very lucrative. And its generous cash back match makes the card all the more rewarding during the first year you own it. 

It's also a beneficial choice if you have some major expenses coming up. There's a 15-month 0% introductory period on purchases, which means you could carry large expenses at no cost for more than a year—and earn up to 10% in cash back on them, due to that first-year rewards match.

With its 0% APR on balance transfers, the card also has appeal if you’re laboring with a balance on another card on which you’re paying high interest. Or, even if you simply worry you might have to carry a big balance in the future. Be aware, though, that to qualify for the 0% introductory rate on balance transfers you must initiate the transfer before March 10, 2022.

The card is also more forgiving than some others to people who miss a payment. There’s no late fee on the first late payment and Discover imposes no penalty APR after you do so, a break that relatively few cards grant. 

Discover It Cash Back Credit Card Bonus

Discover will automatically match all of the cash back you've earned at the end of your first year as a cardholder. You don't need to sign up and there's no limit on how much you can earn.

That's potentially a very profitable bonus. If you reached the $1,500 maximum on 5% rewards each quarter—hardly a given, admittedly—you would earn a $300 bonus for the year on top of your $300 in cash back rewards. And that's without considering the match on the 1% cash back you’d earn on all other purchases in your first year.

The only downside to this offer is that you'll need to wait until the end of the year to get a credit on your account. Other cards that deliver a cash or points bonus, like the Chase Freedom, give you the bonus within a few months of opening an account, provided you spend a certain amount within that time.

Rewards Earning Details

This card offers 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. All other purchases you make outside of the bonus categories earn 1% cash back. With Cashback Match, get an unlimited dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically.

Purchases must also fit Discover's definition of the category in order to qualify for high rewards. 

Fortunately, those category definitions are generally fairly broad. For example, restaurant purchases encompass those made at full-service restaurants, cafes, cafeterias, and fast food locations. One definition that’s less generous is that of grocery store purchases; as with other card issuers, these omit those made at convenience stores, gas stations, warehouse clubs, discount stores, Walmart, and Target.

This is Discover's calendar of rotating categories for 2022:

• January–March: Grocery stores, fitness clubs, and gyms
• April–June: Gas stations and Target
• July–September: Restaurants and PayPal 
• October–December: Amazon.com and digital wallets

Rewards Redemption Details

You can receive your cash back as a credit to your account, where it can be applied to your balance at any time, or sent electronically to your bank account. There’s also an option to use them directly as payment at certain retailers, including Amazon.com, or to direct them to charities. An additional, potentially lucrative option is to exchange the cash back for a gift card at Discover partners. Gift cards start at $5 of value.

You must accrue at least $5 in rewards to redeem them for gift cards. For the other redemption methods, you can redeem rewards when you have earned as little as one cent.

Your rewards never expire. If your account is closed or if you haven't used your card in 18 months, Discover will credit your account with your cash back bonus.

How to Maximize Your Rewards

Getting the most out of this card begins with being organized enough to take advantage of Discover's selection of rotating categories. Set calendar reminders to activate the rotating category before the beginning of each quarter, and then use the card accordingly.

You may even want to plan purchases that are flexible in their timing to take advantage of the bonus schedule. For example, you might want to stock up on non-perishable foods and paper goods at the supermarket during a quarter when grocery stores are featured, and postpone purchases of electronic items and beauty supplies until Amazon.com is on the 5% list. 

Such planning can help you reach—or at least get closer—to the $1,500 quarterly spending cap for spending in the bonus categories. And that, in turn, is especially lucrative during the first year of card ownership, when the cash back match essentially doubles your cash back earnings. Also, be vigilant about using the card for all other transactions during that year, since it’s unlikely you have another card that pays better than 2% (1% when you buy, the bonus 1% at year's end) on every purchase.

Average Case

This scenario uses part of Discover's four quarterly bonus categories for 2022 (in turn, groceries; gas stations plus Target; restaurants; and Amazon.com, and assumes your spending is that of an average household in each. According to the Bureau of Labor Statistics, in each quarter you would spend approximately $1,235.50 on groceries, $392 on fuel, 593.75 in restaurants, and $358.50 on apparel.

That apparel spending could earn 5% cash back in two different quarters with Target in Q2 and Amazon in Q4. Obviously, there is additional spending that could qualify for 5% cash back such as gyms, PayPal purchases, and other purchases at Amazon and Target, but we are simplifying here to provide you with an example.

Assuming you remember to activate each category during its respective quarter, that spending would earn you $146.92 in 5% cash back for the year by using this card. In the first year, after receiving the cash back match, you'd have a total of $293.84 at the end of the year. These figures don't take into account other purchases outside of rotating categories on which would you’d earn 1% in cash back as well as additional purchases that may fit the 5% categories not included in our scenario.

Aspirational Case

This scenario assumes higher-than-average spending, preferably to reach the $1,500 spending cap on bonus categories in as many quarters as possible. 

Reaching it in all four quarters of a year is not entirely realistic, given that the average spending for many featured categories, as noted above, is a fraction of $1,500. But we’ll assume our big-spending household is able to reach the spending cap for three of the four quarters. 

Using 2022's rotating categories as a guide, we'll say that you're able to spend $1,500 in grocery stores during the first quarter, gas and Target purchases during the second quarter, and purchases at Amazon.com in the fourth quarter. We'll also assume you spend as much as the average consumer at restaurants during the third quarter. 

At the end of the year, your total for 5% cash back would be $254.69, which would rise to $509.38 in your first year, given the match on cash back rewards. Again, those rewards totals don't take into account other purchases outside of rotating categories, which would earn 1% in cash back as well other purchases that may earn additional 5% cash back which would mainly be PayPal purchases in quarter three since that is the only non-maxed category in this scenario.

Discover It Cash Back Credit Card's Outstanding Benefits

• No late fee on your first late payment
• No foreign transaction fee
• No penalty APR

Standard Benefits

• Social Security number monitoring
• $0 fraud liability on unauthorized charges
• Overnight card delivery
• 24/7 U.S.-based customer service
• Year-end summary
• Free FICO credit score
• Discover identity alerts and account monitoring
• Freeze it on-off switch (from app) to prevent unauthorized charges 

Cardholder Experience

Discover ranked second out of 11 national card issuers and scored well above average in the J.D. Power 2021 U.S. Credit Card Satisfaction Study. Discover's score was just one point behind the first place issuer.

Discover says its customer service is based in the United States. It's available over the phone, on its website, or through the mobile app. Help is available 24 hours a day at 1-800-DISCOVER or you can contact customer service online, including via live chat. 

Security Features

Discover, as with many other card issuers, allows you to freeze and unfreeze your account as needed and to monitor your credit report online or through the mobile app. The company will notify you if there is suspicious activity, and you’re never responsible for unauthorized charges, which are also standard features.

Our Verdict

The Discover It Cash Back offers handsome rewards, but you need to pay attention and put forth some effort in order to earn them. Its categories offer a very high rewards rate of 5% in cash back, but you must register every quarter for those. There’s also a $1,500 spending cap on those. That shouldn't be a problem for most households. If anything, it’s likely you'll underspend the caps at least some of the quarters—so make less on these bonus categories than it might appear at first glance.

Given its unremarkable 1% cash back earnings on all other purchases, this card might best be considered as a supplement to another cash back card that pays more on all transactions. For example, it could pair well with the Citi Double Cash card, which pays an unlimited 1% + 1% combined cash back on all purchases—1% when you buy, and another 1% when you pay the purchase off. Switching between Discover's high rate on rotating categories and using the flat-rate Citi Double Cash card for everything else could best amplify your cash back rewards. 

This card has a decent 0% APR offer for balance transfers and purchases. But if a balance transfer is a high priority in your next card, there are other cards with longer introductory periods, such as the Citi Simplicity card, which offers 0% APR for 21 months on transfers made within four months of account opening.