Discover it Cash Back Card Review: Is It the Right Card for You?

By J.R. Duren
HighYa Staff
Updated on: Jul 30, 2019

The Discover it Cash Back card is a cash rewards card that combines several interesting ways to earn rewards ranging from an everyday spending bonus to rotating quarterly 5% categories and a first-year rewards match.

It is this combination of three different ways to earn rewards that make this card stand out from the dozens of other cash rewards cards you’ll find. Some of those cards do rotating categories, others will have a cash back match but none that we’ve reviewed combine both.

In this review, we’re going to help you understand how you can earn rewards with this card, what its rates and fees are and how it compares to other cash rewards cards.

At the end of our review, we’ll give you our thoughts about the card’s strengths and weaknesses, as well as who we think it’s good for.

How the Discover it Cash Back Rewards Work

Quick Facts
Discover it Cash Back Card
Pros: Lowest APR of the leading cash back cards and no late fee the first time you make a late payment.

Cons: Yearly rewards and intro APR period lag behind the other cards.

Estimated Yearly Cash Rewards: $425
Sign-Up Bonus Annual Fee Regular APR
$425 $0 14.24% to 25.24%
Rewards Rate: 5x on rotating categories, 1x on everything else

Cash back cards work off of a very simple concept. Nearly every time you use your card to buy something, you’ll earn a percentage of the purchase back. Discover will deposit that percentage to a rewards balance you can view from your Discover account.

What makes all the difference in the world, though, is which percentage of cash you get back. For example, the Citi Double Cash is our choice for the best cash rewards card of 2019 because its 2% rewards rate is the best among mainstream cash back cards.

The Discover it Cash Back card, however, works in a little bit of a different way. Instead of giving you one cash-back rate for your purchases, you get two.

The first rate is 5%. Discover applies the 5% to certain categories of purchases you make and those categories change every quarter. Here is the quarterly Discover 5% cash back calendar available at the time publishing:

  • Jan. to Mar.: Grocery stores
  • April to June: Gas stations, Uber and Lyft
  • July to Sept: Restaurants
  • Oct. to Dec.:

Keep in mind that you have to activate each of these rewards categories by going to your Discover account and activating them manually. Typically, Discover allows you to activate the 5% categories two months in advance.

Also, Discover caps the spending in these categories at $1,500 per quarter, or about $500 per month.

The second rewards rate you get applies to all purchases that don’t fall into the 5% category. This rate is 1%, which is lower than other cash back cards. This brings up an important point.

The two most popular cards with rotating cash-back categories—Discover it Cash Back and Chase Freedom—have 1% rates for everything else. Other popular cards have a flat rate that doesn’t change.

The Citi Double Cash is a good example, as are the Chase Freedom Unlimited (1.5%) and Quicksilver from Capital One (1.5%).

As we’ll point out in our section comparing cash back cards, flat-rate cards are usually the better option. However, there are some cases in which a rotating-categories card could be better for earning rewards depending on the 5% categories they offer.

Based on the Discover calendar we listed earlier as well as the Bureau of Labor Statistics’ data about average household spending, we think the 5% categories can earn you the following totals for one year:

  • Grocery stores: $54.53
  • Gas stations, Uber and Lyft: $24.56
  • Restaurants: $42.06
  •*: $16.50

*These numbers are based on average yearly spending by Amazon Prime customers.

The remaining spending in the average household will earn you around $270 in points. When you combine that total with the bonuses we listed above, we see you being able to earn anywhere from $400 to $425 a year in cash rewards.

The final way you earn rewards with this card is by the first-year rewards match it gives you. Normally, a cash rewards card gives you a lump sum of rewards dollars—$150 is common—when you spend between $500 and $1,000 within the first three months of owning the card. It takes about eight to 12 weeks for that bonus cash to arrive in your rewards account.

The Discover it Cash Back does a first-year match, though. So, if you earn $375 in rewards the first year, you get a $375 bonus deposited to your account after your first year of card ownership is over.

As you can see, this reward far exceeds the industry average and it’s what makes the card an attractive option for those who are willing to wait until the end of the first year to get their bonus.

You can choose to send your cash rewards balance to your Discover statement, transfer it to a bank account or receive it via check. Transferring the bonus to your statement is typically the quickest option for getting your rewards.

The Discover it Cash Back’s Rates and Fees

One of the things that you might forget to research when you’re in the market for a new cash rewards credit card is a card’s rates and fees. This is understandable, of course, because we tend to look at the rewards a card can give us and not necessarily the fees and interest rates that can cut into our bank account.

However, we believe, based on our research and interviews with experts, that rates and fees are an integral part of owning and credit card. They should be understood, especially considering prevailing research indicates that 43 percent of people who have credit cards like the Discover it Cash Back carry a balance. And, when you carry a balance, you pay interest.

With this in mind, here’s a list of the Discover it Cash Back’s rates and fees:

  • Interest rate (APR) for purchases and balance transfers: 14.24% to 25.24%
  • Cash advance APR: 27.24%
  • Cash advance fee: $10 or 5%, whichever is greater
  • Balance transfer fee: 3%
  • Annual fee: None
  • Late payment fee: $0 for the first late payment, up to $37 after
  • Returned payment fee $37

We’re going to emphasize the APR for purchases and cash advances. In our opinion, they tend to be the most pertinent for average people because, as we pointed out earlier, many people with credit cards carry a balance.

As an introduction to interest rates, we want to tell you that credit card companies will charge you an interest rate when you don’t pay off your balance in full on your due date. So, if you have a $1,100 balance and you pay off $100 on your due date, $1,000 is subject to the card’s APR.

Discover will calculate your APR based on your credit scores. In most cases, our research indicates, those with scores above 700 will get the best rate.

Let’s assume your scores are around 700 and that Discover gives you a 14.24% APR. If you average a balance of $1,000 a day, you’ll pay around $12 in interest, or $142 a year. This figure might sound manageable and it is.

But, in 2017 the Consumer Financial Protection Bureau calculated that people with credit scores between 670 and 719 carried balances of around $8,000 across all cards. At 14.25 percent APR, a daily balance of $8,000 will cost you $1,139.20 a year.

Here’s a quick list of what average daily balances will cost you at 14.24 percent:

  • $1,000: $142.40
  • $2,000: $284.80
  • $3,000: $427.20
  • $4,000: $569.60
  • $5,000: $712
  • $6,000: $854.80
  • $7,000: $996.80
  • $8,000: $1,139.20

The only way that you can get around paying interest on a balance you carry is to take advantage of the Discover it Cash Card’s introductory APR offer. The offer gives you 0% interest on purchases and balance transfers for 14 months.

So, if you’re carrying a balance on another card that happens to also have a 14.24-percent APR, then you can transfer that balance to your Discover card and it won’t rack up interest for 14 months from the day Discover approves your application.

They’ll charge you a 3-percent fee but, based on the interest payment examples we provided above, transferring any balance of $1,000 or higher will save you money even when you include the fee.

How the Discover it Cash Back Compares to Other Cash Rewards Cards

There are dozens of cash rewards cards on the market these days, all of which promise cash rewards in one way or another, whether it’s through daily spending, sign-up bonuses or elevated rewards rates in certain categories.

The following chart gives you a comparison of the leading cash back credit cards of 2019:

Discover It Cash Back AmEx Blue Cash Preferred Citi Double Cash Bank of America Cash Rewards Capital One Quicksilver Chase Freedom Unlimited Chase Freedom
Intro cash offer Match on first-year cash back (avg. of $425) $200 after $1,000 spend None $200 after $1,000 spend $150 after $500 spend Match on first-year cash back up to $20,000 (avg. of $300) $150 after $500 spend
Rewards rate 1% with 5% quarterly bonuses 6%/ 3%/ 1% 2% 3%/ 2%/ 1% 1.5% 1.5% 1% with 5% quarterly bonuses
Yearly rewards on $30K spending $425 $605 $600 $422 $450 $450 $425
Intro APR 0% for 14 months on purchases and balance transfers 0% for 12 months on purchases and balance transfers 0% for 18 months on balance transfers 0% for 12 months on purchases and balance transfers 0% for 15 months on purchases and balance transfers 0% for 15 months on purchases and balance transfers 0% for 15 months on purchases and balance transfers
Permanent APR 14.24%–25.24% 15.24%–26.24% (Penalty APR up to 29.99%) 14.49%–24.49% (Penalty APR up to 29.99%) 16.24%–26.24% (Penalty APR up to 29.99%) 16.24%–26.24% 17.24%–25.99% 17.24%–25.99%
Annual fee $0 $95 $0 $0 $0 $0 $0

We believe the Discover it Cash Back is one of the better cards in this table. The three major points of comparison for us are the intro offer (“sign-up bonus”), yearly rewards, and introductory APR.

The card’s sign-up offer is by far the best for two reasons. First, you don’t have to hit a spending requirement in order to get it. Second, it’s bigger than any other sign-up bonus you’ll find among the top cards.

The Chase Freedom Unlimited provides a 3% rewards bonus the first year. Because its regular rate is 1.5%, it’s basically a first-year match. However, the card caps the bonus at $20,000, so the biggest match you can earn the first year is $300. The Discover it Cash Back is the better choice here because there is no cap on the total rewards-match you earn the first year.

The Discover card has a good intro APR but it’s not quite as long as what you’d get from the Double Cash, Quicksilver, Freedom Unlimited or Chase Freedom. We wouldn’t consider this a drawback, mainly because of the bigger sign-up bonus and its lowest APR are still better than every other card listed.

Where this card falters compared to the competition is the long-term benefits. If you’re someone who doesn’t carry a balance and you want a cash-back card you’ll use for the next five or six years, the Citi Double Cash will prove to be the most profitable card for you.

Pro tip: The American Express Blue Cash Preferred and the Bank of America Cash Rewards have bonuses in specific categories that may or may not benefit you.

The Bottom Line: Pros and Cons, and Who the Discover it Cash Back Is Good For

Our research indicates that this card’s greatest strength is its combination of a big first-year sign-up bonus, a good intro-APR offer as well as yearly rewards that aren’t quite as good as the competition but close enough to other cards to make it solid rewards choice.

The downside to the card, in our opinion, is that the first-year rewards don’t show up into your account until after the first year. Other than that, we feel this card is an all-around excellent choice.

Who can benefit the most from this card is something you should consider before making your final decision. If you’re someone who likes to sign up for cards to get a quick cash bonus, then this isn’t the choice for you.

If you are the kind of person looking for a card that provides points you can use for travel, this isn’t the card either. You may want to consider the Chase Freedom Unlimited, whose bonus points you can transfer to hotel and airline programs via a method we teach in our Freedom Unlimited review.

Conversely, if you are hunting for a cash rewards card that you can use for the next two years, we believe this card is a great fit. The yearly rewards you earn from $30,000 in spending plus the first-year rewards match make this card better than the Citi Double Cash over the course of two years.

In the first two years, the Discover card can earn $1,275 in cash rewards, while the Citi Double Cash can earn $1,200.

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