Discover It Card Review - No Annual Fee and 5% Cash Back

Alex Cohen

Discover it Discover it

by Discover

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The Discover it Card is Discover’s flagship rewards card. It offers consumers a great way to earn big cash back rewards on their everyday purchases.

We love this card because it offers one of the highest rewards rates out there: 5% cashback on categories that rotate every 3 months. Discover consistently offers great categories that earn this 5%, including Amazon purchases, gas stations, wholesale clubs and restaurants. Even if you don’t spend a lot on the current promotional category, the card has no annual fee so you can hold on to the card and be sure there’ll come a time when you’ll be able to really cash in.

Card Details

 Annual Fee $0
  Earning Rewards 5% cashback on quarterly rotating categories, 1% cashback on everything else
  Extra Bonus Discover will match your rewards earned in the first year, doubling your cashback!
  Perks The card has average perks, including fraud protection, no foreign transaction fees and includes free credit score tracking and monitoring

Things We Love and Hate

We love the card because it has no annual fee and offers some of the highest cash back rewards in the market. There’s no sign on bonus, but Discover matches all the rewards you earn at the end of the first year and you won’t get hit with fees overseas.

Pros

  • High, 5% cash back on certain categories
  • No annual fee or foreign transaction fees
  • Your rewards are matched at the end of the first year, doubling the rewards you’ll earn

 Cons

  • No cash sign on bonus
  • Not the best card if you don’t spend on the bonus categories
  • The $1500 quarterly spending cap on rewards

Discover Cashback Rewards

What’s nice about the Discover It card is that you don’t have to worry about earning points or miles and figuring out how to redeem them. Instead, you’ll simply earn cash back. The only caveat is that you need to keep track of the current bonus categories and activate the bonus every 3 months and you only earn the bonus on the first $1,500 in spend.

Tip: Birch automatically alerts you when the bonus categories change each quarter so you don’t have to!

How Quarterly Rotating Categories Work

Every 3 months (each quarter), Discover announces new categories or merchants that earn 5% cash back for the next 3 months. In order to earn the 5% cash back, you need to activate the bonus on your account by a certain date, or else you’ll only earn 1%.

Here is the 2017 calendar for the rotating bonuses. As of October, cardholders earn 5% cashback on Amazon.com and Target:

Discover Cashback Match

Outside of the 5% cash back you earn with the card, the most compelling reason to sign up for the Discover It card is that Discover will match all the rewards you earn in year 1.

Let’s say this was your spending in 2017 on bonus categories:

Q1 - Gas, Ground Transportation and Wholesale Clubs: $1,500

Q2 - Home Improvement and Wholesale Clubs: $1,000

Q3 - Restaurants: $1,500

Q4 - Amazon.com and Target $1,500

Totaling $5,500 in 2017 spending on bonus categories

 $5,500 * .05 * 2 = $550 in cash back

That’s enough for a couple of domestic round trip tickets in the US or to knock off the expenses of your upcoming summer vacation. In Year 2, you won’t get your rewards doubled, but you’ll still earn 5% back which adds up quick. Outside of the spending caps, there’s no limit on how many rewards you can earn that are eligible for the matching program in the first year.

 Note: The most you could possibly earn in 5% cash back each year is $300

THINGS TO KNOW

Promotional APR

For the first 14 months of owning the card, you won’t pay any interest on purchases made or balance transfers. This is good for folks who need to rework some of their credit card debt or have an upcoming big purchase they’d like to pay over a longer period of time.

Free Credit Score

Discover offers free credit score tracking and alerts. You’ll get your FICO score, provided by Transunion. It’s a nice perk, but no different than Credit Karma or Credit Sesame.

 

Have the Discover It card? Let us know what you think at team@birchfinance.com

About the Author

Alex Cohen

Alex is the founder of Birch and lives in San Francisco with his two dogs, Duncan and Miller, and his fiance, Sarah. Follow him on Twitter @anothercohen