Discover It Card Review: Cash Back Rewards Promotion

With bonus cash back, low interest rate and no annual fee, Discover It is a good card for many. Is it right for you? Read on for the pros and cons.

The Discover It is a card that's hard to beat. It offers a generous 5% cash back on rotating categories, introductory APR on purchases and balance transfers, and late payment leniency. It also has no annual fee.

Plus, as a promotional offer for new cardmembers, Discover will match all the cash back you've earned at the end of your 1st year, automatically.

But to use this card efficiently, you'll have to pay attention to details. And you'll rack up some nice savings.

How do you know whether Discover It deserves to be your new go-to card? This in-depth review of this cash back credit card will help you decide.

Who This Card is Best For

• If you want to maximize cash back without paying an annual fee. This card gives 5% cash back in categories that change every 3 months (on up to $1,500 in combined purchases in the bonus categories each quarter).

• If you're planning on making large purchases. This card has a promotional APR and for new customers, Discover will match all the cash back you've earned your first year.

• If you travel overseas. This card has no foreign transaction fees, so you can use it on your vacations abroad.

How Discover It Works

Every time you buy something with the Discover It card, you earn cash back. Sounds simple, but Discover It adds an enticing twist...

Every three months, you earn 5% cash back (instead of the standard 1%) on up to $1,500 of combined purchases in rotating bonus categories. This equals a maximum of $75 cash back each quarter in bonus categories (or $300 a year). Once you hit this $1,500 limit, the cash back percentage drops back down to 1%. All other purchases earn 1% cash back with no cap.

Discover 5% Calendar

To get the most value out of the Discover It card, make sure you pay close attention to the spending categories each quarter. See if they fit with your lifestyle and normal spending patterns (for example, if you spend mostly on groceries, then another rewards card may be better suited for you).

The 2019 bonus category calendar is:

• January - March 2019: Grocery Stores
  
• April - June 2019: Gas Stations, Uber and Lyft
  
• July - September 2019: Restaurants
  
• October - December 2019: Amazon.com

It is important to remember that you MUST activate the 5% bonus categories at the beginning of each 3-month period. Activation is free and easy through your account center online or by phone.

For historical reference ONLY, here are the bonus categories for past years:

The 2018 bonus category calendar was:

• January - March 2018: Gas Stations & Wholesale Clubs
  
• April - June 2018: Grocery Stores
  
• July - September 2018: Restaurants
  
• October - December 2018: Amazon.com & Wholesale Clubs

The 2017 bonus category calendar was:

• January - March 2017: Gas Stations, Ground Transportation & Wholesale Clubs
  
• April - June 2017: Home Improvement Stores & Wholesale Clubs
  
• July - September 2017: Restaurants
  
• October - December 2017: Amazon.com & Target

The 2016 bonus category calendar was:

• January - March 2016: Gas Stations and Ground Transportation
  
• April - June 2016: Restaurants and Movies
  
• July - September 2016: Home Improvement Stores and Amazon.com
  
• October - December 2016: Amazon.com, Department Stores and Sam's Club

The 2015 bonus category calendar was:

• January - March 2015: Gas Stations and Ground Transportation
  
• April - June 2015: Restaurants and Movies
  
• July - September 2015: Home Improvement Stores, Department Stores, and Amazon.com
  
• October - December 2015: Amazon.com, Department Stores, and Clothing Stores

The 2014 bonus category calendar was:

• January - March 2014: Restaurants and Movie
  
• April - June 2014: Home Improvement Stores, Furniture Stores, and Bed Bath & Beyond®
  
• July - September 2014: Gas Stations
  
• October - December 2014: Online Shopping and Department Stores

Is Discover It a Good Card?

The 5% cash back in bonus categories is tempting, but you most likely won't be doing all your spending in those categories. So what is the average reward rate you're likely to get?

This depends on how much you can change your spending habits to fall within the bonus categories. Below, we've done some math to figure out the effective reward rate based on how much you can spend in bonus categories. This chart assumes you do not exceed the $1,500 bonus category quarterly maximum.

Take a look at the rewards calendar and see it fits your lifestyle. Think about how much you can realistically spend in the bonus categories. If just more than 12.5% of total spending are in bonus categories (meaning, if you usually spend $1,000 a month, at least $125 of that needs to be in bonus categories), Discover It will beat out flat rate cards like Chase Freedom Unlimited®. Otherwise, if you spend only 10% toward the bonus categories, you may want to consider the Chase Freedom Unlimited instead.

Chase Freedom Unlimited®

See Current Promotion >>

Discover It Benefits

The 5% cash back in bonus categories is only the tip of the many benefits Discover It offers. Here are all the other things you stand to gain with this card.

• 100% cash back match for the first year: As a promotional offer for new cardmembers, Discover will match all the cash back you've earned at the end of your first year. This is an amazing deal to take advantage of if you're planning on some large purchases in the near future.

• Easy and flexible redemption: Discover lets you redeem your Cashback Bonus whenever you want with no minimum requirements. You can apply the rewards to your statement balance, have it deposited into your bank account, exchange for gift cards, or even use the cash back to check out directly on Amazon.
  Tip: In our opinion, the best value is redeeming for gift cards from select retailers. In particular, the ones that offer extra money. For example, you can redeem $40 in rewards for a $50 gift card from some retailers.
  

• Low fees: There are very few fees associated with the Discover It card. There's no annual fee, which can save you quite a bit of money each year compared to what you could be paying elsewhere. In addition, many of the annoying usage fees charged by other credit cards don't apply to the Discover It: there are no overlimit fees, pay by phone fees, or foreign transaction fees.

• Late payment leniency: If you ever miss a payment on the card, Discover is quite lenient. You don't owe a late fee on your first late payment, and Discover never increases your card APR because of late payments.

• Introductory APR: Discover It has an introductory 0% APR on purchases for 14 months (after that, a 18.49% - 27.49% Variable APR, depending on your creditworthiness).

  It also offers an introductory 0% APR on balance transfers for 14 months. Then, the variable purchase APR applies. This is an excellent opportunity for new cardholders to pay down existing debt. Keep in mind, there is a 3% balance transfer fee, but it's usually much lower than the cost of letting month after month of interest build by leaving the balance on another credit card.

Other Perks

Discover also offers a whole slew of other perks that may come in handy:

• Free FICO Credit Score: Get your FICO Credit Score on your monthly statements and online for free. The FICO credit score will be based on the information from your TransUnion credit report. And getting the score from Discover will not impact your credit score.

• Free Identity Theft Alert Service: Discover now offers a free identify theft alert service (in partnership with Experian). This service sends you an alert if your social security number is being used on the dark web and/or if any new credit cards, mortgages, car loans, or other accounts have been opened in your name. This allows you to know if your identity is at risk, so you can take the necessary steps quicker. Discover is the first credit card company to offer a service like this for free.

• Fraud protection: Rest assured knowing Discover has a $0 fraud liability policy and that you won't be accountable for unauthorized purchases on your account.

• U.S. customer service: Discover prides itself on delivering great customer service for its cardholders. This card offers 24-hour live customer support - a rare feature in today's outsourced economy. Customer service representatives are trained to help you maximize your rewards. When you call in, you can explain what you want to do with your rewards and the representative will find the best possible deal for you.

Disadvantages

This card has a whole list of benefits, but here are a few points you may want to consider when deciding whether the Discover It is right for you.

• There's a cap on how much you can earn: The 1% cash back you earn has no limit. But the 5% cash back is only for the first $1,500 worth of purchases in the bonus categories each quarter (which equals $75 in cash back), and then you go back to just 1%, just like all your other purchases.

• You need to pay attention to rotating categories: If you're good at staying on top of deals and can keep track of the rotating bonus categories, you'll love this card. But if you're a bit disorganized and it seems like a hassle to sign up for the bonus categories every 3 months, you may want to get a card that has a simpler rewards structure.

• Discover is not accepted everywhere: Discover is not as widely accepted as Visa or MasterCard, and you may run into problems at smaller merchants. For this reason, this card is great to have to get the high cash back in bonus categories, but you would most likely need an additional card.

Alternatives

It's always a smart idea to compare a card to a few other similar cards to see which one best suits your needs. Here are 3 other cards that you may consider instead.

If the bonus categories don't match your lifestyle:
There is a similar cash back card on the market. The Chase Freedom card has a similar setup: 1% back on regular purchases and 5% on bonus categories that change every 3 months (on up to $1,500 worth of combined purchases, just like Discover It). The key difference is the type of categories (Discover it vs Chase Freedom). Take a look at past cash back calendars to see which card better fits your taste and lifestyle.

If you don't want the hassle of rotating categories:
The Discover it Chrome has a more straightforward cash back program. This card is good to consider if most of your monthly expenses go toward eating out at restaurants and gas. Here is a side-by-side comparison to help:

If you want to earn travel rewards instead of cash back:
Want to travel more? Discover has a no annual fee travel rewards credit card called the Discover It Miles. Instead of earning cash back, you earn miles that you can redeem toward travel purchases (Discover It or Discover It Miles).

Bottom Line

To recap, here are the pros and cons when considering Discover It:

Pros:

• Earn 5% cash back on up to $1,500 in purchases in categories that change each quarter; earn full 1% cash back rewards on all other purchases
  
• 100% match on cash back at the end of your first year
  
• Introductory APR on purchases and balance transfers for 14 months
  
• No annual fee
  
• No foreign transaction fees

Cons:

• Some merchants don't accept Discover

In our opinion, this card doesn't have much in the way of cons. With a high 5% cash back and no annual fee, the Discover It Card is hard to beat. The fact that Discover will match every single cent of cash back earned for the first year is just icing on the cake. Remember that you have to pay close attention to the rotating bonus categories in order to get the best value out of this card.

The main downside is that some merchants don't accept Discover, so we suggest you also have another card in your wallet.