Rotating 5% cash back: Discover it Cash Back review
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Editor’s note: This is a recurring post, regularly updated with new information.This page includes information about the Discover it Cash Back that is not currently available on The Points Guy and may be out of date.
The Discover it Cash Back provides 5% cash back on the first $1,500 in purchases that you make each quarter at select merchants. The eligible merchants rotate quarterly and require enrollment. You’ll earn 1% cash back on all other purchases and the card doesn’t charge an annual fee. There’s no traditional sign-up bonus, but Discover will match all the cash back you’ve earned at the end of your first year. Card Rating*: ⭐⭐⭐
*Card Rating is based on the opinion of TPG’s editors and is not influenced by the card issuer.
Determining how to maximize the points and miles earned by many credit cards can be complicated and time-consuming — and may seem less valuable if you don’t travel. For both of these reasons, my parents use credit cards that earn cash back. As they’ve learned, cash back can be complicated to obtain on some cards — but not on the Discover it Cash Back.
The Discover it Cash Back card provides 5% cash back on the first $1,500 in purchases that you make each quarter you enroll at select merchants, which change each quarter. These merchants include gas stations, grocery stores, restaurants and more. Even if you use travel rewards cards for most purchases, you may find value in adding this card to your wallet. Let’s dive into the card’s benefits, earning, redeeming and how it compares to other cards to decide if the Discover it Cash Back card is right for you.
Who is this card for?
The Discover it Cash Back card earns cash back in rotating quarterly categories. This can make it a solid companion to whatever cards you currently carry in your wallet, since it will boost your earnings to 5% in select categories each quarter on the first $1,500 in purchases, without charging an annual fee. This also means that you shouldn’t rely on the Discover it as your primary or only credit card — you may find some quarters where the bonus categories don’t match up with your personal spending patterns.
The card is most comparable to the Chase Freedom (No longer open to new applicants), which may be a better option if you have (or plan to get) a Chase Ultimate Rewards-earning card that allows you to earn Ultimate Rewards points instead of cash back. On the other hand, it’s generally easier to get approved for the Discover it Cash Back, so it may be a better choice for customers with weaker credit.
The Discover it Cash Back doesn’t offer a traditional sign-up bonus, but it does offer a unique earning opportunity for new cardholders. Discover will match all the cash back you earn during the first 12 consecutive billing periods that your new account is open. The match for the entire year occurs at the end of the 12th billing period. The card also charges a 0% introductory APR on purchases and balance transfers for the first 14 months; then a variable APR of 11.99% to 22.99% applies, which can be useful if you’re looking to pay down credit card debt.
Related reading: The top credit cards with 0% intro APR
Main benefits and perks
The Discover it Cash Back card has benefits and perks that are well-suited for first-time or less experienced credit card holders. It is simple and straightforward to earn and redeem cash back — but we’ll dedicate later sections of this review to earning and redeeming. First, let’s consider the card’s other benefits.
Two of the Discover it Cash Back’s policies — no late fee on your first late payment and the fact that paying late won’t raise your APR — are designed to provide comfort if you make a mistake. Plus, you can pay your bill up to midnight in the Eastern time zone on the day it’s due by phone or online, and U.S.-based customer support staff is always available.
Other benefits and perks of the Discover it Cash Back include:
- No foreign transaction fees
- Free overnight shipping for card replacement to any U.S. street address
- Freeze your account in seconds to prevent new purchases with an on/off switch available on both the mobile app and website
- Free Credit Scorecard that includes your credit score, number of recent inquiries and more
- Free alerts you can activate to know when any new credit card, mortgage, car loan or other account shows up on your credit report
- Free alerts you can activate that notify you if your Social Security number is found on any of thousands of dark web sites
Related reading: Your ultimate guide to Discover cards
How to earn cash back
The Discover it Cash Back earns 5% cash back with different merchants each quarter you enroll, like gas stations, grocery stores, restaurants, Amazon.com and more. For example, from April through June 2020, you’ll earn 5% cash back at gas stations, Uber, Lyft and wholesale clubs after activation.
Related reading: Discover announces 5% cash-back quarterly categories for 2020
You need to activate the 5% earning before making purchases in the bonus category each quarter — but Discover makes the process easy online, and you can activate up to two months before each quarter begins. You’ll only earn 5% cash back on up to $1,500 in purchases each quarter at eligible merchants, however. Assuming you spend $1,500 on purchases in the 5% categories during a quarter that you activate the bonus, you’ll earn $75 in cash back on these purchases.
You’ll also earn 1% cash back on all other purchases with the Discover it Cash Back. However, you can boost your cash-back percentage on other purchases by using another card with better flat-rate earnings or increased earnings in select categories. One example is the Discover it Miles, which also matches the cash back you earn during your first year.
Related reading: Why you should get the Discover it Miles
How to redeem cash back
Some cards earn cash-back rewards but then make it difficult to actually obtain your cash back. This is one place the Discover it Cash Back card excels: There are many options and most will allow you to obtain as little as a penny in cash back:
- Gift cards or instant eCertificates, starting at $20
- Charitable donations to select charities, starting at a penny
- Credit to your account, starting at a penny
- Electronic deposit into any account you designate, starting at a penny
- Pay with Cashback Bonus at select merchants, starting at a penny
For all but one of these options, your cash back is worth its face value. Gift cards can be the exception — some are available with a bonus. For example, you may be able to find some merchants offering a $25 or $30 gift card for $20 in cash back. If you shop with any of these merchants, this will provide the best value. Otherwise, I’d recommend simply redeeming for a credit to your account — instead of using a gift card, you can charge another purchase to your credit card and earn even more rewards.
Related reading: How to redeem Discover cash-back rewards
How does the Discover it Cash Back compare?
The Discover it Cash Back offers 5% bonus categories that change each quarter on the first $1,500 in purchases in those categories. This means that it is directly comparable to the Chase Freedom, which also offers 5% bonus categories that change quarterly (activation required) and also doesn’t charge an annual fee.
The Chase Freedom has a few benefits that aren’t provided by the Discover it Cash Back such as extended warranty protection, purchase protection, trip cancellation and interruption insurance, and secondary auto rental collision damage waiver.
The information for the Chase Freedom card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
If you’re looking for a rotating bonus categories card that can become part of a solid Ultimate Rewards points-earning strategy the Chase Freedom will be a better choice when paired with a Chase Ultimate Rewards-earning card such as the Chase Sapphire Reserve or Chase Sapphire Preferred Card. But the Discover it Cash Back tends to accept lower credit scores, which makes it a better choice if you have less-than-excellent credit.
Related reading: 6 things to do to improve your credit in 2020
Cards with rotating bonus categories like the Discover it Cash Back and Chase Freedom can complement other cards, but should not be your primary card. You should also have a flat-rate cash-back card such as the Citi® Double Cash Card, Chase Freedom Unlimited, Capital One® Quicksilver® Cash Rewards Credit Card, Bank of America® Premium Rewards® credit card or Discover it Miles in your wallet, and you may find it useful to have a few cards that provide useful travel benefits or increased earning in categories you frequently use.
If you are a student, you may want to consider the student version of the Discover it Cash Back — the Discover it Student Cash Back. It provides statement credits for good grades — a $20 credit each school year (September to August) that you earn a 3.0 GPA or higher, for up to the next five years.
Related reading: The best cash-back credit cards of 2020
The Discover it Cash Back provides 5% cash back on up to $1,500 in purchases each quarter in rotating categories. The card has no annual fee, so it’s a relatively easy choice to add to your wallet for use in these categories each quarter — especially if you’ve already exhausted your Chase 5/24 slots. However, the potential cash back in these 5% categories is limited to the first $1,500 in purchases each quarter and you’ll only earn 1% cash back on all other purchases, so this shouldn’t be your everyday go-to card.
Featured photo by Beatrix Boros/Stocksy
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