The Discover it Cash Back is a good option for anyone who wants to earn cash back on their purchases with no annual fee. Bonus categories rotate every quarter, and in 2019 include groceries, gas stations, restaurants, rideshare companies, and some online retailers. Consumers who spend in those categories are positioned to earn plenty of cash back—especially when you consider that Discover will double all the cash back you earn in the first year.
But keeping on top of those categories requires some work. You have to sign up for bonus categories each quarter and perhaps remember to use this card instead of another card on purchases in those categories during that time. So, the card is best for people who don’t mind going the extra mile to maximize their rewards.
Exceptional rewards potential
No annual fee
Excellent customer service
Rewards require work
No competitive perks
- Excellent rewards potential: While you’ll only earn 1% back on your regular spending, we like the fact this card gives you 5% back on the first $1,500 every quarter that you spend in the rotating categories. Discover’s 5% categories tend to be ones consumers can benefit from, making it easy to strategically max them out. Plus, Discover will double all your rewards the first year.
- No annual fee: While not having an annual fee is standard among cash-back credit cards, it’s still nice to know you’ll never pay an ongoing fee to keep this card.
- Excellent customer service: Discover consistently ranks high in customer satisfaction studies and takes several steps to earn that reputation.
- Rewards require work: Where some cash-back cards let you rack up bonus rewards just for using your card, the Discover it Cash Back makes you “activate” your card to earn 5% in bonus categories each quarter. If you fail to activate within the specified time period, you’ll miss out on the bonus rewards.
- Earning caps: You'll earn 5% back on up to $1,500 spent in bonus categories each quarter, but only 1% in those categories once you surpass that threshold. This means you can only earn $75 in bonus cash each quarter.
- No competitive perks: This card has none of the usual perks similar cards offer, such as extended warranties, rental car insurance, or travel insurance.
Discover it Cash Back Sign-Up Bonus
Discover cards don’t offer the kind of sign-up bonuses that other credit cards do; you won’t earn a lump sum when you spend a certain amount in the first 90 days. Instead, you’ll see all your cash back doubled after your first year using the card. While you’ll have to wait longer to get it, you could easily earn twice as much as a traditional bonus on another card.
Based on our calculations and average household spending in the U.S. ($24,297 in 2018, per the Bureau of Labor Statistics), you’ll earn about $376 in rewards each year you have the card. That would make your first-year cash-back match worth $376, too.
Earning Points & Rewards
You’ll earn 5% back on up to $1,500 spent in the bonus categories for any given quarter, and then 1%. The categories rotate and must be activated each quarter to earn the bonus cash. You’ll also rack up an unlimited 1% back on any other spending, and none of your cash back expires.
|Discover it 5% Cash-Back Calendar For 2020|
|Period||5% Cash-Back Rewards Categories||When to Enroll|
|Q1 (January-March)||Grocery stores, Walgreens, and CVS||Now|
|Q2 (April-June)||Gas stations, Uber, Lyft, and wholesale clubs||As soon as Feb. 1|
|Q3 (July-September)||Restaurants and PayPal||As soon as May 1|
|Q4 (October-December)||Amazon.com, Walmart.com, and Target.com||As soon as Aug. 1|
While $376 is our estimate of your annual cash-back potential based on average household spending, you’re certainly not limited to that. If you max out each quarter’s bonus categories, you’d earn $300 a year just for those purchases, plus 1% on everything else.
Rewards earned with the Discover it Cash Back can be redeemed any time and for any amount. Redemption options include:
- Gift cards or e-certificates starting at $20
- Charitable donations starting at one penny
- Statement credits to your Discover account starting at one penny
- Transfers to a bank account starting at one penny
- Purchases made at Amazon.com starting at one penny
How to Get the Most Out of This Card
Make sure to activate your bonus categories each quarter and use the card to the best of your ability, perhaps planning big-ticket purchases in advance. Also charge as many regular purchases as you can since all your cash back will be doubled after the first 12 months.
Since your cash-back rewards are worth exactly 1 cent a piece no matter how you use them, cash them in however you want.
Discover offers a highly-rated mobile app that currently boasts 4.8 out of 5 stars on iTunes and 4.6 out of 5 stars on Google Play. It ranks highest in overall customer satisfaction for U.S. credit card mobile apps, according to data from international marketing firm J.D. Power You can use the app to:
- monitor your account
- make payments
- redeem your rewards
- chat with customer service representatives
Discover also offers U.S.-based customer service that is available any time of the day or night, which is likely part of the reason it ranked No. 1 out of major credit card issuers in J.D. Power’s 2019 Credit Card Satisfaction Study. Discover earned 842 out of 1,000 points in the study, compared to the industry average of 806.
In addition, Discover provides customers free access to their FICO credit score and other key credit information with monthly credit card statements.
- Discover Identity Alert: This feature will notify you if your Social Security number or personal details are found on the dark web, where hackers sell and buy information. You can also set up free alerts to notify you any time a new account is opened in your name.
- Discover’s Freeze It: Lets you freeze your account at any time to prevent new purchases, cash advances, or balance transfers.
- Free overnight shipping for lost or stolen cards: Get replacement cards quickly within the U.S. for no additional charge.
Discover it Cash Back’s Fees That Stand Out
Most of the card’s fees are in line with industry standards for cash-back cards, but note the lack of foreign transaction fees—whatever you buy abroad won’t cost an extra fee, as it does with some credit cards.
Plus, the first time you miss a payment, you won’t be charged a late fee and your interest rate won’t increase to the penalty APR. That’s unusual among credit cards.