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Discover it®: A 5% Contender?

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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
Annual fees $0
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.
Good for:
  • Access to the ShopDiscover bonus mall
  • Use during the holiday shopping season
  • People who fit the card’s bonus categories
  • Earning rewards while paying off a small balance
Bad for:
  • Someone who has a large amount of credit card debt
  • Someone looking for a 5% cash-back credit card with a focus on gas
  • Making a big purchase and paying it off over time

In this article:

The Discover it® basics
When to use the Discover it®
Discover it® vs.  other cash-back credit cards
Discover it® vs. low APR credit cards

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®
Discover It Credit Card
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Discover It Credit Card
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on Discover's
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Signing Promo
Generous. 5% cash back for online shopping and department store purchases on up to $1,500 from October through December 2014 after you sign up*. And 1% cash back on all other purchases.*Generous. 5% cash back for online shopping and department store purchases on up to $1,500 from October through December 2014 after 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.
Annual fee
$0$0
Details
  • 0% intro APR on purchases & balance transfers for 14 months—then a variable purchase APR applies, currently 10.99% - 22.99%. A 3% fee applies to each transferred balance.
  • Over 5,000 cardmembers rated 4.8 out of 5 stars* and now Discover "Ranked Highest in Customer Satisfaction with Credit Card Companies in a Tie" by J.D. Power*.
  • 5% cash back for online shopping and department store purchases on up to $1,500 - Oct. through Dec. 2014 when you sign up*. 1% cash back on all other purchases.
  • Free FICO® Credit Score online and on monthly statements*.
  • No annual fee, no late fee for your first late payment - APR won't go up for paying late, no overlimit fee and no foreign transaction fee.*
  • Each Discover purchase is monitored. If it's unusual, you're alerted by e-mail, phone or text-and never responsible for unauthorized Discover card purchases.
  • 100% U.S.- based customer service—anytime, day and night.
  • *See rates, rewards, free FICO® Credit Score terms and other info by clicking "Apply."
  • 0% intro APR on balance transfers for 18 months—then a variable purchase APR applies, currently 10.99% - 22.99%. A 3% fee applies to each transferred balance.
  • 0% intro APR on purchases for 6 months. Then the variable purchase APR applies, currently 10.99% - 22.99%.
  • Over 5,000 cardmembers rated 4.8 out of 5 stars* and now Discover "Ranked Highest in Customer Satisfaction with Credit Card Companies in a Tie" by J.D. Power*.
  • 5% cash back for online shopping and department store purchases on up to $1,500 - Oct. through Dec. 2014 when you sign up*. 1% cash back on all other purchases.
  • Free FICO® Credit Score online and on monthly statements*.
  • No annual fee, no late fee for your first late payment - APR won't go up for paying late, no overlimit fee and no foreign transaction fee*.
  • Each Discover purchase is monitored. If it's unusual, you're alerted by e-mail, phone or text-and never responsible for unauthorized Discover card purchases.
  • *+See rates, rewards, free FICO® Credit Score terms and other info by clicking "Apply."

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.

US Bank Cash+(TM) Visa Signature(R) Card Credit Card
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When it comes to cards that offer rotating 5% bonus categories, the U.S. Bank Cash+™ Visa Signature® Card is a special case. You get to choose two 5% bonus categories from a slate that includes airfare, department stores and restaurants, and you earn rewards up to $2,000 spent per quarter. You also get an unlimited 2% cash back on gas, groceries or drugstores (your choice), and once a year you can redeem $100 worth of cash back for $125. Like the Discover it®, the U.S. Bank Cash+™ Visa Signature® Card doesn’t have a sign-up bonus. The Nerds think the U.S. Bank Cash+™ Visa Signature® Card bests the Discover it®, but there’s a potentially significant catch: You can only apply in a US Bank branch. If you live near one, the U.S. Bank Cash+™ Visa Signature® Card  is a fantastic card to have.

Chase Freedom®  vs. Discover it®

Chase Freedom - $100 Cash Back Credit Card
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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:

Chase Freedom®
 
Chase Freedom - $100 Cash Back Credit Card
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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®

Citibank Citi Double Cash Card Credit Card
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Rotating bonus categories are all well and good, but if you’re looking for a cash-back card with a high, ongoing rewards rate, it doesn’t get much better than the Citi® Double Cash Card .With this card, you’ll earn 1% cash back on all your purchases, then an additional 1% cash back when you pay them off. This means that if you’re paying your balance in full every month, you can expect to reliably earn cash back at one of the highest levels out there for credit cards. That is a very high return on your purchases and payments that almost no other cash-back card on the market can compete with. Plus, it comes at no annual fee.

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

Citibank Simplicity Credit Card
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If you’re looking purely for a low-interest credit card, the Discover it® is a jack of all trades – but a master of none. The title of longest-running 0% APR period goes to the Citi Simplicity® Card, which offers 18 months of zero interest on both purchases and transfers. It also has no penalty APR and no late fees, ever. The Discover it® does earn rewards, which the Citi Simplicity® Card doesn’t, but generally speaking, you’ll pay more in interest than you will in rewards. If you carry a balance, try to minimize the number of months that you’ll be hit with finance charges.

Chase Slate Elite Credit Card
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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.

 

  • BigD

    Hey Nerdwallet, glad you got your act together and are writing articles more professionally. Kudos!

  • disqus_bOdq3A9HUV

    In comparing the It with the Forward, how in the world is some sign up bonus a tie with no sign up bonus??? That literally makes no sense whatsoever. Those 10,000 points can be worth up to $100, depending on how they’re redeemed.

  • http://twitter.com/_ArcTic_FiRe Tom@L

    true. Citi forward’s 10,000 thank you points is equal to $100 signup bonus.

  • stanolshefski

    As of September 2012, the Cii Forward no longer has a cap on points per year.

    • http://www.nerdwallet.com/ NerdWallet

      Hi there,

      The Citi Forward card still shows a 75,000 annual ThankYou Points cap – check out the terms here: https://www.citicards.com/cards/wv/cardDetail.do?screenID=960&contentId=BV46EZG .

      Thanks for using our site!

      • stanolshefski

        I have the card and I can tell you that the terms have changed. Many Fatwallet members are reporting the sme change in terms.

        • http://www.nerdwallet.com/ NerdWallet

          Hey Stan,

          You’re completely right. We obtained a copy of a Citi Forward cardholder agreement, which states:

          Earn at least 1 ThankYou Point for every $1 spent on all eligible purchases.

          Earn, on average, 4 extra points for every $1 you spend when you shop through the ThankYou® Bonus Center, a network of your favorite retailers, at thankyou.com.

          There is no limit to the amount of points you can earn.

          We’ll be sure to update our info on the blog – it’s a shame it’s no longer being offered, but we hope it’ll find its way back soon.

          Thanks again for the tip,
          The Nerds

          • stanolshefski
          • http://www.nerdwallet.com/ NerdWallet

            Hi Stan,

            Unfortunately, the only version available is the one you mentioned here – the college student version. While still a good option for students (you earn 5 points per $1 on fast food and bars, after all), the Citi Forward for Students is a step down from the no-longer-available adult version. It doesn’t earn 5x rewards on bookstores – which means it doesn’t earn 5x rewards on Amazon.

            It’s a shame – the adult Forward used to be one of the better cards out there for urbanites, and we hope it’ll return.

            Cheers,
            Team NerdWallet

          • stanolshefski

            It says bookstores on that page:

            “5 ThankYou Points for every $1 spent on purchases at restaurants (including fast food), bookstores, music stores, video rental stores and movie theaters; 1 ThankYou Point for every $1 spent on all other purchases2″

          • Alex’s Experiences

            Yes it gets the 5x on bookstores, I have a student and a regular (don’t ask…) both get the reward.

  • http://Techderp.net/ Moscato SugarRush

    I know this is a dated post, but it’s missing something really critical

    The biggest advantage the Discover card has, is access to cashdiscover, which by a longshot is the best cashback shopping mall, period.

    The chase freedom does have a nice signup bonus, but in the longrun, if you use shopdiscover, discover can winout.

  • http://www.doctorofcredit.com/ doctorofcredit

    There is a $150 sign up bonus with $750 spend if you use specific links.