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Discover it Balance Transfer and Cash Back Review: 5% Cash Back

Oct. 15, 2018
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With both the Discover it® Cash Back and the Discover it® Balance Transfer credit cards, you can earn first-rate 5% cash-back rewards in rotating quarterly categories — but they’re not automatic, and spending caps apply.

Even so, for folks who prefer cash back and don’t mind putting in some extra effort, these $0-annual-fee cards are well worth the work.

Discover it cards: Key features

The Discover it® Cash Back and the Discover it® Balance Transfer are practically identical, except for one thing: They offer different introductory APR periods. Here’s how they stack up.

Introductory 0% APR offers

Introductory 0% APR offers

 Discover it® Cash BackDiscover it® Balance Transfer
APR offer0% on Purchases and Balance Transfers for 14 months, and then the ongoing APR of 13.99% - 24.99% Variable APR0% on Purchases for 6 months and 0% on Balance Transfers for 18 months, and then the ongoing APR of 13.99% - 24.99% Variable APR
Best for …Paying off large purchases over time while earning rewards.Paying off balances transferred from other cards while earning rewards.

The two cards share these features:

  • Annual fee: $0.
  • Ongoing rewards:
    • 5% back on rotating quarterly categories on up to $1,500 in purchases each quarter (requires activation); 1% after that.
    • 1% back on all other purchases. (Note: The Discover it® Balance Transfer earns rewards only on purchases, not on balance transfers.) 
  • Sign-up bonus: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
  • Foreign transaction fees: None.
  • Balance transfer fees: 3% of balance transferred.
  • Other benefits:

With both cards, you can redeem cash back for:

  • Direct deposits into any account.
  • Statement credits on your credit card.
  • Donations to select charities.
  • Shopping at Amazon. (You can do this by signing in to your Amazon account, linking that account to your eligible Discover card, paying with that card and applying your cash back at checkout.)
  • Gift cards and eCertificates.

Except in the case of gift certificates and eCertificates, which start at $20, you can redeem for as little as 1 cent. Regardless of how you redeem, 1 cent of Discover it rewards is worth 1 cent in cash.

Both cards also share the same rotating quarterly bonus categories, listed below.

» MORE: Discover credit cards mobile app review

Bonus categories

Bonus categories

Discover bonus categories for 2018
Q1 2018 (Jan. 1 – March 31)Gas stations and wholesale clubs
Q2 2018 (April 1 – June 30)Grocery stores
Q3 2018 (July 1 – Sept. 30)Restaurants
Q4 2018 (Oct. 1 – Dec. 31) and wholesale clubs

Why Discover it cards are worth getting

The robust rewards and benefits on the Discover it® Cash Back and the Discover it® Balance Transfer make them some of the most valuable everyday cash-back cards available. Here’s why:

5% cash back in rotating categories

Among cards with no annual fees, you’d be hard-pressed to find a card that earns more than 5% cash back on bonus categories. That’s why these Discover it cards are so valuable.

If you max out the 5% rotating quarterly category rewards each year on these cards — that is, if you spent up to $1,500 in those categories each quarter all year — you’d earn an annual $300 in cash back. For many shoppers, those lucrative ongoing rewards make this card a keeper.

Potentially valuable sign-up bonus offers

With both the Discover it® Cash Back and the Discover it® Balance Transfer, Discover will match all the rewards you earn in your first cardmember year.

For example, if you earn $500 in rewards, Discover will give you another $500 in cash back at the end of your first consecutive 12 months of being a cardholder. For folks who plan to do a lot of spending on the card during that time, this unusual offer could prove incredibly valuable.

Introductory 0% APR periods

Both Discover it cards give you some breathing room when carrying balances. They each offer generous 0% APR periods:

  • Discover it® Cash Back: 0% on Purchases and Balance Transfers for 14 months, and then the ongoing APR of 13.99% - 24.99% Variable APR.
  • Discover it® Balance Transfer: 0% on Purchases for 6 months and 0% on Balance Transfers for 18 months, and then the ongoing APR of 13.99% - 24.99% Variable APR.

On both cards, the balance transfer fee is 3% of the amount transferred, which is on par with other balance transfer cards.

If you want to make a large purchase and pay it off over time, the former is more valuable. If you’re looking to transfer a balance, the latter is a better fit. Just keep in mind that if you’re using either card as a balance transfer option, you’ll likely want to avoid making new purchases with it, and instead use the card solely for paying off debt — and that might mean missing out on the rich sign-up bonus offer.

How Discover it cards compare with the Chase Freedom®

If you’re looking at cards that offer 5% cash-back rewards on rotating quarterly categories, chances are the Chase Freedom® has been on your radar, too. At first glance, this card seems like a mirror image of the Discover it cards — but if you look a bit closer, a few important differences stand out.

What these cards have in common:

  • 5% cash-back rewards in rotating quarterly bonus categories on the first $1,500 of purchases each quarter
  • Broad bonus categories
  • Requirement to activate quarterly categories
  • No annual fees

What’s different about the Chase Freedom®:

  • Sign-up bonus can be earned quickly: Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening. (With the Discover it cards, you have to wait until the end of the first year to get your sign-up bonus.)
  • Slightly longer introductory 0% APR offer for purchases: 0% on Purchases and Balance Transfers for 15 months, and then the ongoing APR of 16.74% - 25.49% Variable APR.
  • Rewards can be earned retroactively if you activate the categories by the 14th date of the third month in the quarter; this is not the case with the Discover it cards.
  • Charges foreign transaction fees.

For more information about how these cards differ, read NerdWallet’s article comparing the Discover it® Cash Back and the Chase Freedom®.

Why you might want to go with another card

The Discover it® Cash Back isn’t the best fit for everyone. Here’s why you might want to look elsewhere for a card.

You’re looking for more simplicity

With rotating bonus categories that require quarterly activation, the Discover it® Cash Back and the Discover it® Balance Transfer are relatively complicated cards. If you want something more straightforward, try the Citi® Double Cash Card – 18 month BT offer instead.

This card offers an impressive 2% cash back on everything — 1% back on purchases and 1% back when you pay them off. With it, you can rake in big rewards for everyday spending without having to mess with bonus categories. It also comes with an annual fee of $0.

You want to choose your own bonus categories

With the Discover it® Cash Back and the Discover it® Balance Transfer, you don’t have a say in which bonus categories you get. With the U.S. Bank Cash+™ Visa Signature® Card, it’s a different story.

With that card, you can earn 5% cash back on two categories chosen from a list on the first $2,000 of combined purchases made each quarter. You’ll also earn 2% cash back on another category chosen from a separate list, and 1% cash back on everything else. The annual fee is $0. The card also comes with a New Cardmember bonus: $150 after you spend $500 in eligible net purchases in the first 90 days of account opening.

And if you want to see how this card compares with other cash-back cards, refer to our list of best credit card offers.

Should you apply?

If you want a no-muss-no-fuss card, you might want to pass on the Discover it® Cash Back and the Discover it® Balance Transfer. But if you’re willing to put in some extra effort if it means getting top-notch cash-back rewards, it might be the perfect fit for you.