The Discover it® offers some pretty enticing terms: 5% cash back in rotating quarterly bonus categories (up to $1,500 in combined spending per quarter), no interest on purchases or balance transfers during an introductory period, no annual fee and access to the 5-20% discounts available on the ShopDiscover mall. But as an everyday card, it’s up against a tough slate of competitors. It does have its virtues, mostly for online shopping and especially during the holiday season. Let’s take a deeper look at whether or not this is the right card for you.
|At a glance|
|0% APR promotions||14 months of 0% APR on purchases and transfers, OR
18 months of 0% APR on transfers and 6 months on purchases
|Balance transfer fee||3% of the amount transferred|
|Rewards program||Cash back|
|Signup bonus||None (the standard for cash-back cards is $100)|
|Verdict: It’s a good card, but the 5% cash-back field is very competitive.|
In this article:
The Discover it® basics
The Discover it® offers 5% cash back in rotating bonus categories, up to $1,500 spent per quarter. Here are the bonus categories for 2014:
- January-March: Restaurants and movies
- April-June: “Fresh for Spring” (home improvement stores, furniture stores, Bed Bath & Beyond)
- July-September: “Summer Break” (last year, gas)
- October-December: “Holiday shopping” (last year, online purchases)
There are two versions of the card: one with 14 months of 0% APR on purchases and balance transfers, the other with 18 months of 0% APR on transfers and 6 months of 0% APR on purchases. Both versions come with:
- No foreign transaction fee or over-the-limit fee
- No penalty APR
- Free FICO scores
- Waived first late-payment fee
|Discover it®||Discover it®|
|Generous. 5% cash back at gas stations on up to $1,500 in purchases from July through September 2014 after you sign up*. And 1% cash back on all other purchases.*||Generous. 5% cash back at gas stations on up to $1,500 in purchases from July through September 2014 when you sign up*. And 1% cash back on all other purchases.*|
|Intro APR Promo|
|0% intro APR on purchases and balance transfers for 14 months.||0% Intro APR for 18 months on balance transfers. 0% Intro APR for 6 months on purchases.|
All right, got the basics? Now let’s compare it to other cards out there.
When to use the Discover it®
Arguably the best part of the Discover it® is that it grants access to the ShopDiscover online bonus mall, which gives 5-20% cash back on popular online retailers, from Marriott (5%) to Restaurant.com (20%). In our comparison of online rewards malls, Discover trumps Chase’s Ultimate Rewards Mall and Citi’s Bonus Cash Center.
The next-best part of the Discover it® is the bonus category for the fourth quarter. Historically, it includes online shopping — indeed, in 2013 the bonus category was online shopping, excluding travel, government (read: taxes), tuition payments and utilities. Basically, it’s geared toward holiday shopping — stocking up on presents and decorating the house with festive cheer. If you stack this on top of ShopDiscover promotions, you get quite a deal. For example, you can get 10% off at Macy’s as of April 2014.
And finally, the Discover it® gives you free access to your FICO score and prints it on your monthly statement. Unlike some free credit monitoring services, Discover gives you your credit score — and it’s your FICO score, not an approximation. In a time of data breaches, identity theft and increasing weight given to that three-digit number, having this service is a big feather in the card’s cap.
Discover it® vs. cash-back credit cards
The Discover it® is up against a series of 5% cash back heavyweights: the Chase Freedom® and U.S. Bank Cash+™ Visa Signature® Card.
on US Bank's
on US Bank's
Chase Freedom® vs. Discover it®
The Chase Freedom® is a bit more traditional. It offers a sign-up bonus (unlike the Discover it®) and the 5% bonus categories change quarterly. Here’s the 2014 bonus schedule:
|Rewards limit||5% rewards capped at $1,500 per quarter|
|Jan-Mar||Gas, movie theaters, Starbucks|
|Apr-Jun||Restaurants and Lowe’s|
|Jul-Sep||Gas and Kohl’s|
|Oct-Dec||Amazon, Zappos and select department stores*|
*See the full 2014 list of participating department stores here.
In terms of the fourth-quarter 5% bonus categories, there’s a case to be made for both the Chase Freedom® and the Discover it®. The Discover it® offers bonus rewards on most online shopping, whereas the Chase Freedom® has a more limited selection, but gives bonus rewards on physical locations as well as online. It’s a tossup based on your spending habits, so think carefully about where you’re most like to make purchases as you’re deciding between the cards.
However, the Nerds agree that the bonus categories offered by Discover it® in quarters 1-3 of this year have been slightly less exciting than the Freedom’s. And what’s more, there’s the Freedom’s signup bonus: Get a $100 Bonus after spending $500 on purchases in your first 3 months from account opening..
If it’s an option, you could get both the Chase Freedom® and the Discover it®. They’d both come in hand in the 4th quarter of 2014 for holiday shopping. After that, you’re probably better off leaning on Chase Freedom® for everyday use and then turning to the Discover it® for ShopDiscover mall access.
Citi® Double Cash Card vs. Discover it®
What’s more, you won’t have to worry about running into caps on your rewards with the Citi® Double Cash Card . The amount of cash back you can earn is unlimited, which isn’t the case with the Discover it® when it comes to scoring extra rewards in featured bonus categories.
If you’re excited about the idea of earning extra cash back at featured retailers throughout the year, the Discover it® delivers. But if you think it’s a hassle to go online and sign up every quarter, then readjust your shopping plans so that you’ll get bonus rewards, you can count on the Citi® Double Cash Card to deliver a solid cash-back rate, no matter where you do your day-to-day spending.
Discover vs. low APR credit cards
But if you’re intending to do a balance transfer, you’ll also have to consider the associated fee — this is where the Chase Slate® comes out ahead. It offers 15 months at 0% APR on purchases and balance transfers. Plus, it has no balance transfer fee if you complete the balance transfer within the first 60 days of opening your account. The Discover it® charges the standard 3%; that saving can easily make up for the shorter period or potentially even the rewards earned on theDiscover it®. Let’s say you transfer $10,000 and pay off $600 every month — enough to have it paid down in 18 months. This would cost you $10,300 with the Discover it® and $10,033 with the Chase Slate®‘s minimum APR; in this scenario, you’ll save $267 with the Chase Slate®. Again, the Discover it® offers some balance transfer perks, but it doesn’t offer any special features that make it really stand out.