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The Discover It Card: Your Key to Cash-Back Glory

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The Discover It is the talk of the town: A brand-new rewards card that offers 5% cash back on rotating categories, no annual fee, access to killer cash back offers and the kind of elite perks you rarely see on free credit cards. But does the Discover It hold up under closer review? According to us nerds, it does indeed.

Discover It Credit Card

Discover it®-New! Double Cash Back your first year

Apply Now on Discover's secure website

Pros

  • Bonus cash back categories
  • No annual fee
  • 0% on purchases for 12 months and 0% on balance transfers for 12 months
  • No foreign transaction fee

Cons

  • Needs excellent credit

Sign-up Bonus

5% cash back in categories that change each quarter up to the quarterly maximum when you sign up.

Annual Fee

$0

Intro APR Promotions

0% on purchases for 12 months and 0% on balance transfers for 12 months

APR

  • APR: 10.99% - 22.99% Variable*
  • Cash Advance APR: 24.99%, Variable

Card Details

  • New! Double all the cash back you've earned at the end of your first year automatically - only for new cardmembers*
  • 5% cash back in categories that change each quarter like gas, restaurants, Amazon.com and more -up to the quarterly maximum when you sign up.* 1% cash back on all other purchases.
  • 0% intro APR on purchases & balance transfers for 12 months—then a variable purchase APR applies, currently 10.99% – 22.99%. A 3% fee applies to each transferred balance.
  • New Freeze It℠ on/off switch lets you prevent new purchases, cash advances & balance transfers on misplaced cards in seconds by mobile app & online.*
  • Track your recent FICO® Credit Scores for free in one easy-to-read chart on monthly statements & online.* Plus get 100% U.S.-based service.
  • No annual fee. No overlimit fee. No foreign transaction fee. No late fee on first late payment & paying late won't raise your APR.*
  • Each Discover purchase is monitored. If it's unusual, you're alerted by e-mail, phone or text and never responsible for unauthorized purchases on your Discover card.
  • *See rates, rewards, FICO® Credit Score terms & other info by clicking “Apply.”

Live like a king, without paying through the nose

The best part about the Discover More is that it offers premium-level features like price and return protection, which you typically see on only the high-end, super-expensive cards. Moreover, it waives a number of pesky fees, and is your entree to ShopDiscover, an online bonus mall offering 5%-20% cash back on popular retailers from Apple to Walmart. Here’s how the It’s features compare.

Feature Details Interest Level
5% cash back in rotating bonus categories Through March 2013, earn 5% back on restaurants and movies, up to $1,500 spent per quarter. All other purchases, and bonus purchases above the limit, earn 1%. Unimpressed: the US Bank Cash+ offers an unlimited 5% back on categories that you choose.
Really, really no-fee The standard no annual fee, plus no foreign transaction fee or penalty interest rate, and your first late payment fee is waived Intrigued: Better than the other 5% cards
18 months of 0% interest on balance transfers With 6 months of 0% on purchases; alternatively, 14 months of 0% APR on purchases and transfers Cautiously optimistic: That’s the longest 0% balance transfer period in the business
Purchase, warranty, price and return protection Discover will refund or insure covered purchases, with fairly generous limits of ~$500 per incident Enthusiastic: This kind of benefit is almost never seen in no annual fee cards
Access to ShopDiscover Pretty much the best online bonus mall out there, giving an extra 5-20% cash back on popular retailers Sign me up!

Move over, Discover More, there’s a new card in town

The new Discover It replaces the longstanding Discover More, which offered 5% cash back and either 14 months of 0% APR on balance transfers and purchases, or 6 on purchases and 18 on transfers. We didn’t think too highly of the More as a cash-back card, but it stacked up well as a balance transfer card that earned rewards. The It keeps the 14-month 0% APR promotion, but without the transfer deal, it’s not quite as compelling. Still, its bonus categories (the same as the More’s) are decent, and unlike the More, you get 1% back on all non-bonus spending, rather than earning just 0.25% on the first $3,000 spent annually. This is in addition to the waived or mitigated fees: it has no foreign transaction fee, no penalty APR, and no late fee the first time you miss a payment.

Here’s the Discover It’s bonus schedule for 2013:

  • Q1: Restaurants and movies, up to $1,500 spent per quarter
  • Q2: “Spring style” (last year: restaurants and movies)
  • Q3: “Summer fun” (last year: gas, movies and theme parks)
  • Q4: “Holiday shopping” (last year: department stores and online shopping)

But the Discover It is not without downsides. We’ll compare it to the two reigning 5% cash back champions, the Chase Freedom and US Bank Cash+.

Enter Chase Freedom, stage left

We don’t deny that the It is better than the More, giving 1% rewards right off the bat. But another opponent has entered: the Chase Freedom. Like the Discover It, the Freedom has no annual fee and gives 5% bonus rewards to $1,500 spent quarterly. Here’s how the cards’ features compare:

Freedom Discover It Winner
Signup bonus Earn a $100 Bonus after you spend $500 on purchases in your first 3 months from account opening 5% cash back in categories that change each quarter up to the quarterly maximum when you sign up. Freedom
0% APR promotion 15 months on purchases and transfers 14 months on purchases and transfers/18 on transfers and 6 on purchases Depends
Fees N/A No foreign transaction fee, first late fee waived, no penalty APR Discover It
Acceptance Near-universal Not as good as Visa/MasterCard Freedom
Protections Only basic security Purchase, return, price and warranty protection Discover It
Online bonus malls Chase Ultimate Rewards Mall, ranks 4/20 ShopDiscover, ranks 1/20 Discover It

To sum it up, if it’s acceptance and a signup bonus you’re looking for, the Freedom’s your guy. But if you want ongoing rewards or perks, Discover’s got you covered, easily.

And stage right, the US Bank Cash+

The other 5% mainstay is the US Bank Cash+. It offers 5% cash back on two bonus categories (you choose from a slate that changes quarterly), 2% on gas, groceries or drugstores, and 1% elsewhere. And if you save up $100 worth of cash back, you get an extra $25, bumping your rewards rate up to 6.25%, 2.5% and 1.25%. Not bad! Here’s how this one stacks up.

Cash+ Discover It Winner
Signup bonus N/A 5% cash back in categories that change each quarter up to the quarterly maximum when you sign up. Tie
Rewards Up to 6.25% back, no limit 5% back, up to $1,500/quarter Cash+
0% APR promotion 6 months on transfers 14 months on purchases and transfers/18 on transfers and 6 on purchases Discover It
Fees N/A No foreign transaction fee, first late fee waived, no penalty APR Discover It
Acceptance Near-universal Not as good as Visa/MasterCard Cash+
Protections Only basic security Purchase, return, price and warranty protection Discover It
Online bonus malls None ShopDiscover, ranks 1/20 Discover It

In this case, the Cash+ card’s superior rewards carry the day. But if you’re looking to pay no interest on balance transfers or purchases, avoid hidden fees or take advantage of perks usually reserved for the elite, the Discover It offers all that and more.

Chase Freedom®U.S. Bank Cash+™ Visa Signature® Card
Chase Freedom Credit Card
Apply Now

on Chase's
secure website

US Bank Cash+(TM) Visa Signature(R) Card Credit Card
Apply Now

on US Bank's
secure website

Signing Promo
Earn a $100 Bonus after you spend $500 on purchases in your first 3 months from account openingN/A
APR
0% for 15 Months on purchases and 0% Intro APR for 15 months on balance transfers, and then the ongoing APR of 13.99%-22.99% (Variable)0% for 9 months on balance transfers, and then the ongoing APR of 12.99% - 23.99% Variable
Annual fee
$0$0
Details
  • Named a Best Card for Cash Back by MONEY® Magazine
  • Earn a $100 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • Earn a $25 Bonus after you add your first authorized user and make a purchase within this same 3-month period
  • 0% Intro APR for 15 months on purchases and balance transfers. After the intro period, a variable APR of 13.99-22.99%
  • Unlimited 1% Cash Back on every purchase
  • 5% Total Cash Back on up to $1,500 in combined purchases in bonus categories each quarter
  • You'll enjoy new 5% categories every 3 months like Gas stations, Restaurants and Amazon.com. It's free and easy to activate your bonus each quarter!
  • No annual fee and rewards never expire as long as your account is open
  • 5% cash back on your first $2,000 in combined net purchases² each quarter on two categories you choose*.
  • 2% cash back on your choice of one everyday category (like gas or groceries)*.
  • 1% cash back on everything else*.
  • No limit on total cash back.
  • Subject to credit approval.

  • Zoo

    The first table says “Forward” on it and doesn’t make sense. Do you mean Freedom?

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

      Thanks for catching the mistake, Zoo!

  • BigD

    I really get tired of Nerdwallet slamming the Discover card with their biased reviews because of sponsorship. First, Discover has now aligned itself with Chase on the 1% front, both offer 5% rotating with the same $1500 quarterly cap. People don’t care about balance transfers when they’re looking for a good cashback card.
    So what, the Freedom offers a measly $100 signup bonus and Discover does not right now. In the past, Discover has offered signup bonuses and if I remember Chase offered $200+ roughly two years ago. Some other great benefits that Discover has is purchase, price and extended warranty protection plus great discounts through Shop Discover. Also, Discover has great customer service that is actually based in the USA when you call for assistance. The truth is folks is that they’re both good cards and you can’t go wrong with either one. How is that for an accurate and unbiased review Nerdwallet?

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

      Hi there, Big D:

      You’re right, a major improvement on the Discover It vs. the Discover More is that it now gives 1% cash back on non-bonus spending immediately, as opposed to after spending $3,000 a year. And Discover does offer purchase, price and extended warranty, though the Chase Ultimate Rewards Mall is equivalent to ShopDiscover in offering discounts.

      However, I think that Visa/MasterCard’s greater acceptance, as well as the signup bonus, factor significantly into the calculation. The Freedom’s offered bonuses of up to $300 before; Discover hasn’t been able to keep page. Currently, you’d have to spend $2,000 more in the 5% categories on the Discover card in order to make up for the deficit – that’s more than you could possibly spend in one quarter.

      The area where the Discover shines is in avoiding fees, between the first waived late payment fee and waived foreign transaction fee. It’s worth noting, though, that Discover is not universally accepted internationally: https://www.discover.com/credit-cards/help-center/account/international-use.html.

      • http://twitter.com/sunkcosts slug

        The reality is you can’t really maximize your credit card rewards spending without carrying Discover and Freedom. Discover was a decade behind on the 1% piece, but they made lots of money with those tiers. Not off me though. I only use these cards for 5% cash back.

      • http://twitter.com/alexexperiences Alex’s Experiences

        I have my issues with Discover, but acceptance isn’t a huge difference. I’ve had my Discover Card refused one time (and the merchant is setup to accept them and just refuses to, so I reported them to Discover, we’ll see what happens next time). Customer service is above average – not quite as good as Capital One but better than, say, Citi. Internationally, it depends where you go. In China, the largest country in the world, Discover acceptance is far above Visa/MasterCard.

  • W R

    With Discover’s Cash Over program about 60 U.S. merchants can give cash back with a Discover Card purchase (Like an ATM.) There is no transaction fee. Also, no interest if the cash received is paid back by the monthly due date. Do any other credit cards have a similar program?