The Discover It Card: Attractive Cash Back Awards for Shoppers
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What if you had a rewards credit card that treats you like you would treat yourself? That's the marketing campaign behind the Discover It card, which promises to provide you with attractive rewards and a personal customer service experience.
With some innovative practices, the Discover It card has been making waves. But how much of it is marketing hype, and how much of it can actually benefit consumers? Let's take a look.
How This Card Works
The Discover It card is a rotating cash back credit card. Every quarter, you are required to sign up for the special categories that earn 5% cash back. Discover also has an online mall where you can earn up to 20% cash back on certain purchases. All "regular" purchases earn 1% cash back, and once you reach your 5% special category cash back limit ($1,500 per quarter), category purchases earn cash back at 1%, too.
The categories are:
- Jan-Mar: Restaurants and Movies
- April-Jun: Fresh for Spring
- Jul-Sep: Summer Break
- Oct-Dec: Holiday Shopping
(Editor's note: The current categories from October through December 2014 are up to $1,500 in online shopping and department store purchases when you sign up.)
This credit card comes with a 14 month 0% introductory APR — then a variable purchase APR applies (currently 10.99% - 22.99%). A 3% fee applies to each transferred balance. There is no annual fee, no penalty APR, no overlimit fee, and Discover It won't charge foreign transaction fees.
With the Discover It credit card, you can make your payments up until midnight on the due date, and still be considered "on time." The fact that you won't be hit with a super-high penalty APR in addition to your late fee is a plus, even if you do end up paying late.
You can redeem your cash back rewards for gift cards (and get up to double cash back when you opt for a gift card rather than cash), cash, or merchandise. It's also possible to use your cash back to make direct payments at Amazon.com (but you have to link your account).
Discover is also promoting its 100% U.S. based customer service call center — any time, day and night. The company has long been ranked highly for customer service, and with the It card, Discover is once again actively promoting the fact that a real person will answer your call in seconds.
As expected for most credit cards, Discover It comes with a $0 fraud liability guarantee, as well as flight accident insurance, and rental car insurance.
This card looks out for you, since 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.
There is no annual fee for the Discover It card. However, there are other costs. If you carry a balance, your APR will be between 10.99% and 22.99%, depending on your credit score. Additionally, if you decide to transfer a balance, you will pay a 3% fee. This is charged even if you are transferring a balance during the 0% APR introductory period.
The biggest pro to the Discover It card is the cash back rewards program. You can earn up to 5% cash back in rotating categories. For someone who pays attention to the categories and plans out purchases, this can be a great deal.
Additionally, it's definitely a plus that shopping through Discover's online mall can bring you up to 20% cash back — without the need to worry about categories. Savvy shoppers can also enjoy the fact that choosing certain gift cards as rewards can mean double the cash back. If your favorite store offers a gift card on Discover's bonus program, you can really benefit. And, it's convenient that you can use your rewards to directly pay on Amazon.
The flexibility of the Discover It card is also a plus. You have the ability to pay online or by phone up until 11:59 p.m. on your payment's due date; many credit cards insist that you pay by 3 p.m., 5 p.m., or 7 p.m. for the payment to be properly credited. The lack of a penalty APR is also encouraging. It's also nice that the flexibility of the Discover It card includes no foreign transaction fee, making it ideal for travelers.
Plus, get a free FICO® Credit Score online and on your monthly statement to help you stay on top of your credit.
Finally, the Discover it card offers a 14-month introductory APR, which is among the longest 0% APRs offered in the credit card industry as of this writing.
There are some downsides to the Discover It card. Before you sign up, make sure you understand the rewards program, since there are some quirks that can make it a bit difficult to deal with.
If you want to get the 5% cash back on rotating categories, you have to remember to sign up for the rewards each quarter. If you forget, you will miss out on some of your category earnings.
A second, minor disappointment is that you are limited as to how much you can earn in 5% rewards each quarter — the award is capped at $1,500 per quarter (after a whopping $30,000 in spending). Once you reach that threshold, your rewards drop to 1%, even if you spend in the quarterly category. This is better than Discover's old program, which started you out at 0.25% cash back until you spent $3,000, but it's still a bit of a disappointment.
Also, while there is a 0% APR, it is a bit disappointing that the Discover It card doesn't offer a signup bonus. Many rewards credit cards offer you a cash bonus just for signing up and spending a certain amount during the initial months of your membership, but the Discover It card isn't one of those credit cards.
Who This Card Is Best For
Like many cash back credit cards, the Discover It card is ideal for those who want to earn money on their regular spending. If you are willing to plan out your spending and sign up for the rotating categories, this can be a great card to help you maximize your cash back (as long as you don't habitually hit the quarterly limit).
Because the Discover It card comes with a generous 0% APR, it can be ideal for those who are trying to pay down debt by consolidating balances. As with most rewards credit cards, Discover It works best when you pay off your balance each month so that the interest you pay doesn't offset your cash back earnings.
Those with poor credit who carry balances may not get the best use of this card once the introductory period is over, since the interest rate is a rather high 22.99% for those at the lower end of the credit score scale.
For those looking for a reasonable rewards program and a card with flexibility — and if you travel overseas and want to avoid transaction fees — the Discover It card is well worth carrying.
Important: If you're looking to transfer a balance, there is another version of this card that offers 18 months of the 0% promotional rate for balance transfers. The trade-off is the promo rate for purchases is only 6 months.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.