Posted by: John S Kiernan

EDITOR’S RATING 3.3 / 5 PROS

• Rewards earned in the first year get doubled
• Up to 5% cash back
• 0% intro rates for 14 months
• No annual fee

CONS

• Bonus reward categories rotate, require quarterly signup and limit earnings
• 3% - 5% balance transfer fee
• Potential for a very high regular APR

The Verdict:  Discover it® Cash Back (Discover is a WalletHub partner) is a decent everyday credit card for people with excellent credit who want to earn rewards without paying an annual fee, yet might need more than a month to pay off certain expenses. In both respects, it’s particularly beneficial during the first year that you have it.

On the rewards front, it offers 5% cash back in bonus spending categories that change every three months, in addition to 1% cash back on everything else and a promotion that will double your first-year earnings. That’s a package with the potential to make the first 12 months quite profitable but probably not to the extent that you’d assume and with more effort than you might expect. Not only do you have to sign up for the new bonus categories each quarter in order to earn at a 5% rate, but that rate also applies to just the first qualifying purchases you make during that period, up to a maximum quarterly. So even if the bonus categories complement your spending habits and you remember to enroll on schedule – both of which are far from guaranteed for most people – your ability to earn will still be limited.

When it comes to financing, you’ll get 0% for 14 months on both new purchases and balance transfers (a 3% intro (5% after) fee would inflate the cost of balance transfers).

The Highlights

• Up To 5% Cash Back In Bonus Categories: Five percent cash back is an impressive earning rate in a market where 1% is standard and the value of points and miles is somewhat opaque.

• 1% Cash Back On Everything Else: This is the market-average cash-back rate, providing a solid floor for your rewards earning.  It will apply to all purchases that do not qualify for the bonus categories. 

• Cash Back Earned The First Year Gets Doubled: In lieu of an initial rewards bonus, Discover it® Cash Back offers to double the cash back that you earn during the first year.  Maxing out your quarterly bonus-category spending would therefore allow you to earn $600 cash back for the year, rather than $300, and your 1% base earning rate would effectively become 2% for 12 months.  Exactly how valuable this sign-up incentive ultimately proves to be depends, of course, on your spending habits.  But, to the average person, it figures to be worth roughly $525 overall, including the extra $300 from the bonus categories.

• No Redemption Minimum Or Rewards Expiration: Most rewards credit cards require you to have a certain amount of points, miles or cash back in order to redeem. This makes it difficult to benefit from your earnings on a regular basis and, in many cases, increases your odds of falling victim to rewards devaluation or seeing your bounty expire.  There are no such issues with Discover it® Cash Back, as you can redeem the cash back that you earn at any time, regardless of amount, and earnings do not expire. If nothing else, this should help reduce stress. 

• No Annual Fee: Whether you’re interested in rewards or financing, not having to pay an annual fee is always nice. This lack of fixed costs will allow you to keep your account open longer than you might have otherwise, which will benefit your credit score, assuming responsible use.  It therefore should be factored in to any comparison made between the Discover it® Cash Back Card and one of its competitors that charges an annual fee, whether that charge is initially assessed either the first or second year your account is open.

• 0% Financing For 14 Months: Discover it® Cash Back offers 0% introductory rates on both new purchases and balance transfers for the first 14 months after account opening. Using a credit card calculator will help you determine how long it will take to repay such amounts, thereby helping you minimize the cost of financing.

The Lowlights

• Bonus Categories Rotate & Require Quarterly Signup: Discover it® Cash Back is not a card that allows you to maximize rewards with a hands-off approach. Every three months, you will have to sign up for each newly available bonus category in order to earn 5% cash back on qualifying transactions. Not only is this a hassle, but there’s also no guarantee that a given quarter’s bonus categories will fit your spending habits. And you certainly don’t want to drastically alter your purchasing plans just because a bit of extra cash back is available.  

• Bonus Category Earnings Capped At $75 Per Quarter: The fact that you’ll earn 5% cash back on only the first $1,500 spent across each quarter’s bonus categories means that you can earn a maximum of $75 per quarter, or $300 per year, in rewards on such expenses. That’s not too bad, but it’s not what most people expect when they see 5% cash back advertised, either.

• 3% Intro Balance Transfer Fee: Depending on how much credit card debt you have to transfer, this fee could loom quite large or simply represent a minor annoyance. It would amount to $252 for the average household, based on their roughly $8,400 balance. That’s a significant amount, which could threaten your ability to get out of debt before regular rates kick in and immediately start to eat away at savings. But if you have only a few hundred dollars in lingering debt, pay your bill in full every month and are mostly interested in Discover it® Cash Back for rewards, the 3% intro (5% after) fee wouldn’t cost you much in the grand scheme of things.  

• Likelihood Of A High APR: The Discover it® Cash Back Card advertises a regular APR that can be anywhere from 14.24% - 25.24% (V), depending on your credit standing at the time of application. And while there’s a possibility that you will be awarded a rate close to the 14.49% market average for cardholders with excellent credit, the low end of its APR range is reserved for applicants with the most spotless credit histories. As a result, many applicants will wind up with a regular rate more in line with the averages offered to people with fair credit (22.99%).

Other Things To Consider

• Extra Value On Gift Card Redemption: Rewards credit cards typically offer a number of different redemption methods, which usually provide varying levels of value. For example, one card’s points might be worth 1.5 cents each when redeemed for travel yet only 1 cent each as a statement credit.The fact that Discover it® Cash Back distributes rewards in the form of cash ensures you get at least face value upon redemption (e.g., $100 in cash back earnings can be redeemed for a $100 statement credit). However, you might also get even more bang for your buck by redeeming for gift cards. This strategy will pay you a 25% premium on average, and it’s possible to score a gift card worth up to twice as much as your cash back earnings. 

• No Foreign Transaction Fee, But Limited International Acceptance: Discover is one of the few issuers that has completely abolished foreign fees from their credit cards. As a result, this isn’t a perk specific to this credit card, but it will make your wallet happy if you regularly travel abroad or make purchases through an internationally based merchant.One thing potentially standing in the way of that happiness, however, is the fact that Discover isn’t as widely accepted around the world as VISA and Mastercard – operating in roughly 50 countries, compared with the 200+ of its bigger competitors. But you don’t necessarily need to see the Discover logo to be able to complete a purchase because Discover cards are also accepted by merchants that belong to the Diners Club, JCB, and China Union Pay networks. That brings Japan, mainland China and Diners Club’s 185 countries and territories into the fold. 

• Free Credit Score On Monthly Statements: All of Discover’s credit cards now offer a free FICO credit score on monthly account statements, enabling customers to easily stay abreast of their credit standing.  This is certainly helpful, as most consumers know far too little about their credit scores.  But given how common free credit scores have become – check out WalletHub’s free credit score service to learn more – it’s not worth opening a particular credit card just to get one.

• Human, U.S.-Based Customer Service: One of Discover’s main selling points is that live, U.S.-based customer service representatives are available 24 hours a day, seven days a week to answer cardholder questions.  This is an important point of differentiation for many consumers given the prevalence of automated customer service lines throughout the rest of the industry.  Discover has also earned a number of rewards for customer satisfaction and loyalty, so they must be doing something right.

• Free Overnight Replacement Cards: If you ever lose or damage your card, you can request that an overnight replacement be sent to any U.S. address – while you’re on vacation, for example – and you won’t have to pay a thing. American Express and Bank of America offer this same service, but it’s certainly not common. In most cases, even expedited replacement deliveries take a couple of business days and can cost up to $25.

• Flexibility For Late Payers: Discover it® Cash Back does not have a penalty APR, which means you won’t see rates skyrocket due to a couple of late payments. Furthermore, Discover waives your first late fee if you are ever tardy with a payment. Most issuers will do the same if you ask, but they don’t make it policy. 

• Freeze It: This feature represents a bit of a redundancy given that all credit cards guarantee users $0 liability for unauthorized charges, but the ability to temporarily restrict account-spending privileges at the click of a button through the Discover mobile app can at least provide a measure of reassurance. It prevents new purchases, cash advances and balance transactions from being authorized but doesn’t interrupt pre-established recurring monthly payments. 

Compared To The Competition

	SponsoredDiscover it® Cash Back	SponsoredCiti® Double Cash Card – 18 month BT offer	SponsoredCapital One® Quicksilver® Cash Rewards Credit Card	SponsoredChase Freedom®
Annual Fee	$0	$0	$0	$0
Rewards Bonus	N/A	N/A	$150	$150
Rewards Rate	1 - 5% Cash Back	2% Cash Back	1.5% Cash Back	1 - 5% Cash Back
Purchase Intro APR	0% for 14 months	Not Offered	0% for 15 months	0% for 15 months
Transfer Intro APR	0% for 14 monthsTransfer Fee: 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*	0% for 18 months*Transfer Fee: 3% (min $5)	0% for 15 monthsTransfer Fee: 3%	0% for 15 monthsTransfer Fee: Either $5 or 3% of the amount of each transfer, whichever is greater
Regular APR	14.24% - 25.24% (V)	15.74% - 25.74%* (V)	16.24% - 26.24% (V)	17.24% - 25.99% (V)
Editors’ Rating	3.3 / 5	5.0 / 5	4.4 / 5	3.3 / 5
Details, Rates & Fees	Learn MoreRates & Fees	Learn More	Learn More	Learn More
Winners	Capital One® Quicksilver® Cash Rewards Credit Card		Citi® Double Cash Card – 18 month BT offer

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