Discover®️ It Cash Back: Credit Card Review
Welcome to our 2nd Credit Card review. Today we will be taking about the Discover ®️ It Cash Back Credit Card. This was my second credit card after the Bank of America Cash Rewards (if you exclude a Macy’s one which I opened). I was referred by a colleague and we split the referral bonus (so find a trustworthy referrer, why should only one person benefit!) This was mainly recommended as it is a great credit card for those new to the credit system but have developed enough of a score and for those who are students. This card is great for those who are starting off with one credit card and who will likely utilize the category bonus to good effect. The best thing is that this card will match all the cash back you have accumulated, which means if you aim solely for purchases that will give you 5% cash back, you will get 10% cash back by the end of the year duration from opening the card.
Main Perks
- Earn 5% cash back each quarter at varying categories of merchants like gas stations, grocery stores, restaurants, Amazon.com, up to the maximum for that period. Plus, earn unlimited 1% cash back on all other purchases.
- Cash back match at the end of the first year.
- Redeem cash as statement credit at no minimum value.
- No annual fee and no foreign transaction fees.
- 0% intro APRs for purchases and balance transfers for 14 months.
- FICO® Score for free.
What are the categories?
The key part is what are the categories to maximize value. Generally the last quarter is always Amazon.com, Walmart.com and Target. The other quarters tend to vary from year to year but the good thing is that you are given the year in advance to plan. Here are the categories for 2020. for 5% cash back.
| Quarter | Jan-Mar 2020 | Apr-June 2020 | July-Sept 2020 | Oct-Dec 2020 |
| 5% Cash Back Categories | Grocery Stores, Walgreens, CVS | Gas Stations, Lyft, Uber and Wholesale clubs | Restaurants and PayPal | Amazon.com, Target.com and Walmart.com |
Cons/Reasons for Alternatives
- It requires activation (like the Chase Freedom® but it doesn’t retroactively apply and unlike the Amalgamated Bank of Chicago Platinum Rewards Mastercard® Credit Card
- No quick bonus (unlike the Chase Freedom®)
- Not as widely accepted
- It’s a cash back card, you can’t play the points/miles game (more on that!)
How does The Penny Pinching Doc use it?
When I first got this card in May/June 2017, I knew what the categories were going to be, they were restaurants from July to September 2017 (great for those exploring new places with family, which is what I was doing with family at the time), Amazon and Target for the last quarter, and for 2018 it was Uber/Lyft (which I was using a lot) and Groceries. There were no Gas categories in the first year meaning there wasn’t going to be a quarter where I would miss out (which is a big chunk if you don’t have a car!). Now as you know you should only spend what you would have spent anyway. Groceries and transportation are unavoidable so I was able to mx out those categories. Restaurants I normally wouldn’t utilize that much (though I’m not boring!) but it worked out well that this was when I would take family to New York and could explore new places. For the seasonal quarter (Oct-Dec) I really utilized the Amazon category. I had made a lot of friends and family who had really helped me settle into USA, so this was a great opportunity to show my appreciation, I spent around 300-350 dollars on gift cards for people and I would further buy myself more for use in the future. Out of the 5% categories I earned somewhere around $200 (maximum is $300) and this was doubled to $400 at the end of the first year. Apart from the Amazon gift cards which I used later on things I needed, I didn’t spend on anything extra.
The main rival at the time to the Discover card was my Bank of America, which was only (at the time) giving 3% on gas, 2% on groceries and 1% for everything else. So apart from groceries (when it was the quarters where grocery was 1% with Discover), everything went on the Discover that had to be paid. I think there were only 3 restaurants in New York that wouldn’t accept Discover. Overall I think I got just under 500 dollars from cash back in the first year (400 from the 5->10% categories and 50 from the 1->2%).
During this time I was slowly building up my credit score, and utilizing a very nice feature which is the FICO credit score check. Using this I was able to apply for my next credit card, the big Chase Sapphire Reserve! More on that another time.
Conclusion
In conclusion this was a great card as one of my first two credit cards. It’s perfect if you are willing to plan your expenses and know how to utilize your expenses to your advantage as well as knowing what to do if you have to spend on other things. Great for newbies and students. I’m sure other old timers will join me in reminiscing on this nostalgic credit card. On that note, hope you are all having a great weekend Penny Pinchers!