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How to Make the Most of the Discover it Card

May 20, 2016
Cash Back Credit Cards, Credit Cards
How to Make the Most of the Discover it Card
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We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners. Here’s how we make money.

If you carry the Discover it® Cash Back, you’ve got a powerful financial tool right there in your pocket. The value of this card is all about the rotating 5% bonus categories. But making the most of those categories means keeping track of them each quarter to maximize your rewards.

Let’s look at some best practices.

The basics

The Discover it® Cash Back is a cash back card with an annual fee of $0. It pays a flat 1% cash back on all purchases, and 5% back on up to $1,500 spent in bonus categories that change every three months. Category purchases in excess of that amount will revert to the flat 1% rewards rate.

Here are this year’s 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)Amazon.com and wholesale clubs

The card also offers a special promotion when you first sign up. As Discover puts it: 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.

Align spending with bonus categories

If possible, group your spending in each category so that more of it occurs during the bonus period, at least until you reach the $1,500 spending cap.

Of course, some expenses can be delayed until the bonus category period and some can’t. In 2016, for instance, you may be able to save a home improvement project until late summer to take advantage of the bonus category in the third quarter. And you still need to fill your gas tank even though the first quarter bonus on gas has ended.

If you’re nearing the end of the quarter and you haven’t reached the $1,500 spending cap, you may be able to buy a gift certificate at an in-category store where you frequently shop. For example, you could buy a gift certificate at your local movie theater or your favorite restaurant during the second quarter, which ends June 30.

Don’t overspend on bonus categories

Just like you shouldn’t buy something solely because it’s on sale, you shouldn’t spend extra money just to get the 5% cash back. Instead, consider maximizing your Discover it® Cash Back rewards on things you would’ve spent money on anyway. Avoid breaking the budget just for a few extra percentage points in your rewards account.

» MORE: NerdWallet’s best cash back credit cards

Activate bonus categories

The Discover it® Cash Back will pay the 5% bonus cash back only if you opt into the bonuses every quarter. While you can opt in any time before the quarter ends, you’ll only get the rewards boost starting on the date you sign up. That means it’s in your best interest to sign up on the first day of the quarter.

If you’re likely to forget, we suggest setting a reminder on your smartphone or online calendar, or jotting a note on your paper calendar. That way, you’ll remember to log into Discover’s website or app on Jan. 1, April 1, July 1 and Oct. 1 to activate your bonus categories for the new quarter.

Pair the Discover it® Cash Back with another card

The Discover it® Cash Back’s 1% flat rewards rate for all purchases is not too shabby. But you could get a higher rate by carrying additional cards. Here are a few to consider.

Chase Freedom®

Some credit card devotees carry two cards with 5% rotating bonus categories, such as the Discover it® Cash Back and the Chase Freedom®. That increases the chances that there will be an active rewards category in one of your larger budget areas at any given time. It comes with an annual fee of $0.

» COMPARE: Chase Freedom® vs. Discover it® Cash Back

Citi® Double Cash Card – 18 month BT offer

Unless you like to use one card for everything, the Nerds often recommend pairing the Discover it® Cash Back with another card that has a higher flat rewards rate, and then using the other card for purchases not in the 5% bonus categories. The Citi® Double Cash Card – 18 month BT offer, for instance, pays 1% back on all purchases, but when you pay them off another 1% is deposited in your account. The annual fee is $0.

Chase Sapphire Preferred® Card

Carrying a cash back card like the Discover it® Cash Back with a really good travel rewards card like the Chase Sapphire Preferred® Card is one of the Nerds’ favorite strategies. The Chase Sapphire Preferred® Card pays 2 points per dollar for restaurant and travel spending — not as high as 5%, but available all year with no cap. There is an $0 for the first year, then $95.

It’s no accident that the Discover it® Cash Back shows up on our site a lot. The Nerds like it for its low fees, and we appreciate that the bonus categories match up nicely with the way most people spend money. This card is best suited to people who don’t want a set-it-and-forget-it flat rate rewards card, but enjoy maximizing their rewards.

Virginia C. McGuire is a staff writer at NerdWallet, a personal finance website. Email: virginia@nerdwallet.com. Twitter: @vcmcguire.