Posted by: John S Kiernan

Discover’s new-look credit card rewards program – branded Cashback Bonus – offers members the ability to earn cash back on every purchase, as well as to choose from a variety of redemption options, ranging from statement credits to gift cards and online merchandise.

Given the importance of understanding what a given credit card issuer has to offer before applying for one of its cards, we conducted a thorough review of Discover’s Cashback Bonus rewards program in order to see where its strengths and weaknesses lie as well as how it stacks up against the competition.

To compare your options, check out Discover’s latest offers.

1. Credit Cards Eligible for Cashback Bonus Rewards
2. Best Cashback Bonus Rewards Credit Cards
3. Maximize Cashback Bonus Rewards Earnings
4. Redeem Cashback Bonus Rewards for Maximum Value
5. Cashback Bonus Rewards Transfer Partners
6. Pros & Cons of Cashback Bonus Rewards

Credit Cards Eligible for Cashback Bonus Rewards

Below you’ll find a table listing the Discover credit cards that are currently eligible for the Cashback Bonus rewards program.

Eligible Credit Cards for Cashback Bonus Rewards
Discover it® Student Cash Back
Discover it® Cash Back

Best Cashback Bonus Rewards Credit Cards

It’s a bit tricky to single out the best Cashback Bonus rewards cards given that there are only a few offers. However, from a rewards standpoint, we’d have say that the following is the best offer:

Discover it® Cash Back – This card offers 5% cash back for every dollar you spend in featured categories, up to $1,500 in combined purchases per quarter each time you activate. In addition, you receive 1% cash back on all other purchases – and not to mention, there is no annual fee.

Maximize Cashback Bonus Rewards Earnings

All of the credit cards in the Cashback Bonus rewards program earn cash back at different rates. To view these base-earning rates, see the table below:

Card Type	Earning Rate
Discover it® Student Cash Back	5% cash back on rotating bonus categories (up to $1,500 in combined purchases per quarter each time you activate) and 1% cash back on all other purchases
Discover it® Cash Back	5% cash back on rotating bonus categories (up to $1,500 in combined purchases per quarter each time you activate) and 1% cash back on all other purchases

However, in addition to the stated earning rates, some of the cards benefit from other program-wide method to boost earnings:

• Introducing a Friend to the Program – Discover rewards those who spread the word – and if you’re really determined, you could get up to an extra $500 per year (see below for details).

Earning Perks:

• Earnings Don’t Expire – Your Cashback Bonus dollars never expire by date, from account inactivity, or even if you miss multiple payments. This is a significant perk compared to other rewards programs, as most usually confiscate your earnings if your account is not in good standing.

• No Earning Cap on 1% – There is no maximum on how much cash back you can earn.

• No Minimum Threshold – You are not required to spend a minimum amount on your credit card in order to begin earning cash back.

Earning Restrictions to Watch Out For:

• Earning Rate Varies Based on Amount Spent – All of the credit cards in the Cashback Bonus rewards program have varying earning rates depending on how much you spend. For example, the Discover It® Cash Back card only offers 5% cash back on featured categories for the first $1,500 spent in combined purchases each quarter, provided you activate the new bonus categories each quarter.

• No Initial Bonuses– Many issuers out there incentivize newcomers with credit card initial bonuses (e.g. $400 for spending $3k in 90 days). Unfortunately, Discover is not one of them.

Redeem Cashback Bonus Rewards for Maximum Value

Now that you’ve learned to maximize your Cashback Bonus dollars, it’s time to begin thinking about how you’re going to redeem them. So, the most important question is: Which of Discover’s several redemption options offers the most value per Cashback Bonus dollar?

Well, we crunched and graphed the numbers and the answer is clear: Gift cards are the way to go, giving you $1.34 (on average) for each Cashback Bonus dollar you redeem. The other options simply provide a dollar for a dollar, at face value.

The table below shows a detailed breakdown of the graph above. It specifies how much you can get out of each Cashback Bonus dollar when you redeem it using each of the available options.

Redemption Option	Dollar Worth of Redemption Option	Cash Back Dollars Needed	Cash Back Dollar Valuation
Statement Credit	$100.00	$100	$1.00
Electronic Deposit	$100.00	$100	$1.00
Pay with Cashback Bonus	$100.00	$100	$1.00
Charity Donation	$100.00	$100	$1.00
Gift Cards (Average)			$1.34
Bed, Bath and Beyond Gift Card	$25.00	$20	$1 .25
Kohl’s Gift Card	$25.00	$20	$1.25
Whole Foods Gift Card	$75.00	$70	$1 .07
GAP Gift Card	$100.00	$80	$1.25
Bath&Body Gift Card	$25.00	$20	$1.25
Enterprise Gift Card	$40.00	$20	$2.00
Kmart Gift Card	$50.00	$45	$1.11
Macy's Gift Card	$50.00	$45	$1.11
Applebee's Gift Card	$50.00	$45	$1.11
Kalamazoo Outdoor Gift Card	$100.00	$100	$1.00

Redemption Perks:

• Big Gift Card Discounts – As you can see from the examples in the table above, Discover offers great deals when you redeem your cash back for gift cards. Not only does the program offer gift cards from more than 150 merchants, but all of them provide discounts (some even up to 50% off).

• True Cash Back – Unlike with some other rewards programs, Discover provides actual cash back at the advertised percentage rates, which protects you from rewards devaluation. In other words, 5% cash back means you actually get 5% of the money you spent as a rebate (or more, if you redeem it for gift cards deals).

• Automatic Redemption – In years past, your Cashback Bonus dollars would expire if your account closed or if you left it inactive for 18 months or more. However, Discover recently added automatic redemption to its policy, which precludes your earnings from going to waste:

• No Minimum Threshold – You can redeem your cash back starting at a penny. In other words, you don’t need to accrue a certain amount before you decide to cash out.

Redemption Restrictions to Watch Out For:

• No Internal Travel Booking Tool – Discover’s Cashback Bonus rewards program does not offer any direct ways to redeem for travel. However, one can easily bypass this by doing one of the following:
  • Redeem for Travel Gift Cards – Some of the gift cards offered cover travel-related expenses (like resorts and car rentals). Therefore, you can always redeem for these and get them at a discounted price.

• Waiting for Gift Cards – Discover only sends gift cards by postal mail (taking up to 10 business days), which means you’ll have to wait to use them after redeeming your cash back. While you could opt for an “eCertificate” instead of a physical gift card, this will preclude you from reaping a discount.

Cashback Bonus Rewards Transfer Partners

The Cashback Bonus rewards program does not feature any transfer partners for travel redemption (i.e. travel providers you can transfer your earnings to for direct redemption). However, transfer partners aren’t really necessary for programs operating on a cash-based system anyway. Cash is already the most flexible rewards currency there is.

Pros & Cons of Cashback Bonus Rewards

Now that we’ve examined the program in detail, it’s time for the final evaluation – what are the key advantages and disadvantages of Discover’s Cashback Bonus rewards program? Also, what are the fluff – or, useless – features?

Pros

• Earnings Don’t Expire – Cash back never expires from account inactivity, by date, or even if you miss payments.

• No Earning Cap – There is no maximum on how much cash back you can earn.

• No Minimum Threshold for Earning – You are not required to spend a minimum amount on your credit card in order to begin earning cash back.

• Sharing Is Rewarding – Discover pays you $50 every time you successfully introduce a new member to the program.

• Big Gift Card Discounts – Discover offers great rebates if you redeem your cash back for gift cards.

• True Cash Back – You receive actual cash back at the percentage rates offered, which protects you from rewards devaluation.

• No Minimum Threshold for Redeeming – You can redeem your cash back starting at a penny.

Cons

• Rotating Categories – The Discover cards have rotating bonus categories that you must sign up for on a quarterly basis in order to earn.

• Earning Rate Varies Based on Amount Spent – All of the credit cards in the Cashback Bonus rewards program have varying earning rates depending on how much you spend.

The Fluff

• Pay with Cashback Bonus – This redemption option lets you use your cash back to pay at checkout for certain online retailers (like Amazon.com or Overstock.com). But not only is this option less flexible than getting a statement credit or electronic deposit back, it also doesn’t offer any types of discounts (the way gift cards do). You might as well just use your credit card at the checkout.

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