Updated December 1, 2016
Are you searching for a no annual fee card that has the potential for 5% cash back rewards? Then Discover it® Cashback March may be a good fit for you, but keep in mind that the categories may not always sync up with your routine purchases.
The Discover it credit card actually comes with several perks, including an introductory 0% interest rate for 14 months on new purchases and balance transfers, no annual fee, and a cash back program. It also has a generous introductory offer that matches the cash back you earn at the end of your first year that makes it a great choice upfront.
But what about after the promo ends? We’ll run down how the card works.
The Realities of 5% Cash Back
5% cash back does not mean on everything. Discover, similar to programs like Chase Freedom, offers 5% cash back on select categories every quarter and all other purchases will receive 1% cash back. There is a cap on 5% cash back on up to $1,500 of purchases. There is no cap on the 1% cash back purchases. You can earn 5% cash back in rotating categories each quarter like gas stations, restaurants, Amazon.com, wholesale clubs and more, up to the quarterly maximum each time you activate.
From January until March 2017, the bonus categories are gas stations, ground transportation and wholesale clubs.
With a cap on the 5% cash back of the first $1,500 of purchases in a relevant category, you can earn a maximum of $75 per quarter in cash back rewards and $300 per year.
How do I sign up?
Discover it cardholders do have to “opt in” to the 5% cash back categories each quarter. You can have Discover send you email reminders with the ability to opt in via email or you can opt in after logging into your account.
Do points expire?
Cash back rewards can be redeemed with no minimum threshold and can be redeemed as a statement credit, a credit on Amazon.com orders, a deposit into your bank account, and more. Cashback rewards never expire as long as your account is in good standing. Discover can close your account if has been inactive for 18 months.
Bonus offer for new customers
Additionally, the Discover it card will match all the cash back you earn dollar for dollar at the end of your first year. The double cash back will be applied to your account balance after the end of the 12th billing cycle.
Cashing Out and Perks
Discover provides the option to use your cash back as either a statement credit or a direct deposit into your bank account.
You can also leverage up by purchasing a gift card or eCertificate through the redemption portal and get additional $5 to $20 more. For example, $80 cash back will get you a $100 Banana Republic gift card.
Through a partnership with Amazon, you can use your Discover it cash back to pay for Amazon purchases while checking out. Other CashBack Bonus partners include iTunes and Overstock.com.
Discover it also offers access to your FICO credit score for free on each monthly statement.
Extended Product Warranty: Discover will extend the terms of an existing, eligible warranty on a product for up to a year if the existing warranty is for 36 months or less.
Purchase Protection: Discover will cover eligible purchases up to $500 if they are damaged or stolen within 90 days of purchase.
Price Protection: Discover will refund card members the difference up to $500 on eligible items if you find a product at a lower price at any store within 90 days of the original purchase.
Fees & Gotchas
There is no annual fee for the Discover it card. The balance transfer fee is 3% of the amount of each transfer. There is no late fee the first time you pay late. After that, late payments are up to $37. Discover does not charge foreign currency transaction fees, but it also isn’t as widely accepted like VISA, MasterCard or AMEX.
How it Stacks Up
The Citi Double Cash credit card might be a better option if your goal is to earn as much cash back as possible. The Citi Double Cash credit card offers up to 2% cash back with no cap on the amount you earn as long as you pay on time, which makes it a good all-around card as you won’t have to track and time your spending to take advantage of extra cash back in bonus categories like the rotating 5% bonus cash back categories offered by Discover it. However the Citi Double Cash card has high APRs, which means you should not carry a balance on this card.
The Capital One Quicksilver card also offers a cash back program, however you can only earn 1.5% with this card. One difference is that the Capital One Quicksilver card offers a sign-on bonus of $100, which is something you don’t get from either the Discover it card or the Citi Double Cash card. That $100 sign-on bonus can easily be made up over the long run by the 2% cash back offer of the Citi Double Cash card or the 5% bonus cash back categories offered by the Discover it card.
The Bottom Line
Although this card doesn’t offer the highest all-around cash back rewards program on the market, it does offer many cash back opportunities and an attractive 0% introductory APR with no annual fee. If you are shopping for a card with all of these characteristics, it might be worth giving the Discover it card a try.