The Discover it Cash Credit Card, which has no annual fee, is perhaps the most popular in the “Discover it” line up of cards. The popularity is due to the rotating quarterly categories that earn 5% cashback up to $1,500 spent, which is basically identical to the Chase Freedom. While this is reason enough to be well-received, Discover will double your cash back at the end of your first year as a cardholder. Can you imagine getting 10% back on many of your purchases throughout the year?
Sign Up Bonus (Grade: C)
Through the Discover website, the sign up bonus is zero. But, if someone refers you this card, they get a $50 statement credit and you get $50 statement credit after making a single purchase in the first three months.
Daily Spending (Grade: B+)
The card earns 5% cash back in rotating categories each quarter on up to $1,500 spent. If you spend the full $1,500 in a certain category in a quarter, you’d get $75 cash back. For spending above and beyond the $1,500 in that bonus category you’ll earn 1% cash back. You’ll also earn 1% cash back on all purchases that don’t fall into the bonus category.
It is important to note that you need to “activate” the category bonus each quarter online. This is also required by the Chase Freedom and is a little bit of a hassle, but if you’re being intentional about maxing out your category bonus, it won’t be hard to remember to activate it online.
Getting 5% is fantastic and something you shouldn’t pass up, but getting 1% is below the standard of what you should accept. Our advice is to use this card for the bonus categories and use another great card for other purchases. Except for the first year as you’ll understand better in the next section.
Perks (Grade: A++)
Double Cash Back in Year One – At the end of your first 12 billing cycles, Discover will double all the cash back you’ve earned for the whole year automatically. Even if you only used this card to max out the 5% categories, that would earn you an additional $300. But, if you use this for all your purchases, the 1% cash back on the other purchases now becomes 2% which is really good.
No Late Fee on First Late Payment – Grace is a good thing and something they’re extending if you forget and you’re late one month. But, they’re only giving it to you once.
No Foreign Transaction Fee – We probably save around $20 a year having this feature when we travel up to British Columbia from where we live in Seattle.
Monthly FICO Credit Score – Discover gives you an update on your FICO credit score every month using information from TransUnion. This does not constitute a credit inquiry and it helps keep you up to date on your score. I love this feature and wish more cards offered it.
Redeeming Points (Grade: A+)
We grade cards based on how easily you can use your points. If a card earns hotel points and you can only use them at their hotels, it can be a bit restrictive. In this case, you’re earning cash and it can’t get any more flexible than that.
Overall Grade: A-
The Discover it Cash Credit Card is the kind you get and use for every purchase you make during the first twelve months while you’re taking advantage of the double cash promotion. Then, you keep the card because it has no annual fee and you just use it for the bonus categories. Combine this strategy with the free FICO score every month and we think Discover has created a truly compelling credit card.
This would be a great card to consider if you’re planning to book a Disney vacation package or park tickets.