Discover credit cardholders may be able to squeeze extra value from their cash-back rewards if they snatch up a retail gift card before the holidays rather than exchange their points for statement credits right now.
Over the weekend, credit card offer watchers found that cardholders who use their rewards to buy a gift card may now get 10%-25% more value than they would by redeeming for cash, depending on the retailer. For example, a $50 Old Navy gift card can be purchased for $40 of cash-back rewards right now, as confirmed by The Balance via the Discover cash-back rewards center on Monday. That translates to a point value of 1.25 cent per point.
By contrast rewards earned with Discover credit cards such as the Discover it Cash Back or Discover it Student Cash Back cards are typically worth just 1 cent each when redeemed for statement credits or used as payment with PayPal or Amazon.com. The Balance doesn’t usually recommend that credit card rewards be used to buy gift cards, as it’s not often the most valuable option. However, Discover rewards may be worth 1.11-1.25 cents each when used this way, depending on the retailer, making it the most valuable way to use points.
Here are some more examples of gift card deals The Balance found:
Discover did not respond to The Balance’s request for more information about when exactly these offers started, or how long they will last, by publication time.
For now, these gift card promotions could help you save money on last-minute stocking stuffers or preemptively save on retailers you already frequent. Plus, since retail promotions can be stacked with gift cards, you may be able to save even more on your purchases later on.
Discover offers gift cards from more than 100 retail partners and are typically mailed out 7-10 business days after orders are placed, though the mail delivery may take longer around the holidays. The issuer does offer some gift cards as eCertificates, which are delivered virtually and can be used to shop right away.