Two people at NerdWallet who really know their credit cards carry the Discover it® Cash Back, but for very different reasons.
John Lee, a senior business analyst — a self-described behind-the-scenes number cruncher — formerly worked at the major credit card issuer Capital One. He has carried Discover credit cards for years and once even bought a used car with a Discover card. He likes the online bonus mall Discover offers.
Paul Soucy, assigning editor for credit cards, is relatively new to the card and carries it because of the cash-back bonus categories — one category in particular.
Lee and Soucy carry the flagship cash-back card, the Discover it® Cash Back, which offers 5% cash back in categories that change every quarter (on up to $1,500 in spending per quarter), and 1% back on everything else. It comes with a $0 annual fee and an introductory APR of 0% on Purchases and Balance Transfers for 14 months, and then the ongoing APR of 13.99% - 24.99% Variable APR. It also offers an unusual introductory bonus. Discover describes it this way: “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.”
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Why do you carry Discover it® Cash Back?
“It was offering bonus categories that I wasn’t getting on other cards,” Soucy says.
Of particular interest: higher rewards on home-improvement store purchases, in addition to categories such as gas and restaurants that competing cards offered. For 2016, the card offers 5% back on home-improvement purchases in the third quarter, which is what sealed the deal for Soucy.
“I do a ton of projects around the house,” he says. “Home improvement was a big draw for me. … There were all sorts of things we want to get done around the house that we pushed into the third quarter so we can get 5% back on it. That’s a lot of money. You spend $1,000 on a house project, that’s $50. So that’s totally worth it.”
The second category that sold him on the Discover it® Cash Back was 5% back at Amazon.com, especially during the holiday shopping season. For 2016, Amazon is a 5% category in both the third and fourth quarters. “To me, that’s just a no-brainer,” he says.
Was the sign-up bonus an enticement?
Lee wasn’t a new cardmember, so he wasn’t eligible, but Soucy saw the allure. “That’s effectively 10% back on all of our holiday shopping at Amazon. Why wouldn’t I grab that?” he says.
Do you use Discover’s online bonus mall?
The online mall offers discounts and cash-back bonuses at specific retailers and brands, such as Apple, Wal-Mart and Samsung. To get the deals, visit Discover Deals first and click through to the retailer.
Soucy says he hasn’t visited Discover Deals yet, but plans to check it out. Lee, though, knows all about this particular perk.
“The bonus categories are nice, but the main differentiating factor for me is the Discover rewards mall,” Lee says. He’s trained himself, he says, to check Discover Deals before buying anything online to see whether he can optimize his purchase by getting more rewards there.
Lee also carries the Chase Freedom® card, which has quarterly 5% bonus categories like the Discover it® Cash Back, but says he prefers the Discover product because of the mall.
What’s one of the oddest things you’ve purchased with your card?
Lee says he mostly uses the card for run-of-the-mill purchases, but did once buy a car with a previous Discover. He charged $2,000 on the card when purchasing a used 2005 Honda Civic.
Soucy’s odd purchase: a bite-size charge for fast food. Soucy says he hadn’t been using the card heavily while the bonus category was restaurants, as “we’re not big restaurant people.” But when grabbing breakfast at McDonald’s with a friend, he insisted on paying with his new Discover it® Cash Back.
“Even though breakfast came to $8, I was going to get that 5% back. … Every little bit counts. That’s my philosophy: If I’m going to play this game, I’m really going to play it.”
Is tracking quarterly categories a hassle?
A drawback of bonus-category cards for some people is tracking which categories are active in which quarters of the year.
Soucy knows he has a leg up on the average consumer because it’s part of his job to be familiar with credit card features.
“I fully acknowledge it’s my job to memorize categories and to track them. I recognize it’s not for everyone,” he says. “But I think if you’re serious about optimizing your rewards and cash back, then things like remembering to opt in to the categories and remembering what card to use where, that’s almost like a hobby. You feel like you’re getting one over on the man, you know?”
Are you concerned your card won’t be accepted everywhere?
Years ago, Lee says, it seemed as if about a quarter of merchants where he wanted to use the card didn’t accept Discover.
“I would be dining out with friends, and we would all put our cards down, and the server would have to come back and say, ‘Sorry, sir, we don’t take Discover here,’” Lee says. “But it hasn’t happened to me in the past couple of years. … The acceptance has improved a lot over time.”
Was the $0 annual fee a factor in your decision to apply for the card?
How big a deal is the card’s interest rate to you?
Both Nerds say they don’t consider the annual percentage rate because they don’t carry a balance from month to month.
“I’m a transactor,” Soucy said. “I use cards for the rewards and for convenience, but I pay off the balance. That’s the thing with rewards cards. If you pay your balance, APR shouldn’t be anything you worry about because it just doesn’t matter.”
What other cards do you use?
Both men say the Discover it® Cash Back is not their primary everyday card, though it could certainly serve that purpose. Instead, they deploy it strategically.
When he can’t get outsized rewards with another card, Lee mostly uses the Citi® Double Cash Card – 18 month BT offer. Soucy uses the Capital One® Quicksilver® Card - 0% Intro APR for 15 Months as an everyday card, picking his spots with other cards, including Chase Freedom® and Blue Cash Preferred® Card from American Express.
But both say that Discover it® Cash Back is different enough that it will continue to earn its spot in their wallets.
“I don’t have a lot of complaints because it’s a really low-maintenance card,” Soucy said.
Interviews by Gregory Karp.