When it comes to the world of credit cards, the Discover Network is sort of the baby of the bunch. Next to American Express (first charge card issued in 1958), MasterCard (1966) and Visa (1975) Discover card is still viewed as a relative newcomer, only dating back to 1986. It might be more appropriate, though, to think of Discover not as the baby of the family but as the prodigy who invented the cash back reward as we know it today. More than 25 years after they issued their first card, they continue to set new industry standards, not only for cash back rewards but for customer service and cardholder loyalty.
Choose one of the 5 ways to earn Discover Cashback Bonus
Whichever way you choose every new discovery will become closer with Discover credit cards.
Unlike MasterCard and Visa, which are credit card networks that partner with banks to issue credit cards, Discover issues its own cards – acting as both network and bank in one. Their cards tend to be accepted less widely than MasterCard and Visa, but that is changing fast as more and more merchants add the Discover symbol to their list of preferred payment methods. Discover’s customer service is known as some of the best in the business, and they were one of the first credit card issuers to offer customer service around the clock and create secure online account numbers for their cardholders.
The Cash Back Pioneers
Discover’s “Cashback Bonus” program was the first of its kind, offering cash back rewards on cards with no annual fees. Because of their influence, giving 1% cash back on all purchases is now industry standard for rewards credit cards, but Discover offers many ways to get even more cash back. They routinely offer 5% cash back in certain categories that rotate quarterly, and when you shop through their ShopDiscover network, you can get 10%, 15%, and even 20% cash back at select retailers. Maybe that’s why the data shows that by 2008, more U.S. households had Discover cards than any other rewards card.
Discover offers specialty cards like student and business cards as well as credit cards aimed at the everyday consumer. All of these are essentially cash back rewards card, but they are targeted at different demographics and each has its own set of terms and conditions. We’ll help you make sense of the fine print, telling you what’s unique about each card so you can discover which one is right for you.
The Basic Terms
When it comes to APRs for purchases and balance transfers, and introductory rates, they have two different categories of cards (once again, not including student and business cards):
- The Discover More, Open Road, and Motiva all offer a 0% introductory APR on purchases and balance transfers for 14 months, and Standard Purchase APR of 10.99% - 20.99%± Variable after that, depending on creditworthiness.
- The Miles and Escape cards have a 0% introductory APR period of only 6 months, followed by an ongoing Standard Purchase APR of 10.99% - 19.99%± Variable depending on credit history.
With the exception of their student and business cards and the Escape card, every Discover card is identical in the following ways:
- No annual fee
- 3%± balance transfer fee
- 24.99% APR on cash advances, with a cash advance fee of $10 or 5%, whichever is greater
- Late payment fee - Up to $35
- Returned payment fee of up to $35
The Escape card is the only Discover card that carries an annual fee – it’s $60±. Later we’ll look at what the card offers that might make that annual fee worthwhile.
The Cash Back Contenders
Now that we’ve covered basic terms, let’s look at each individual card and highlight what makes it special. Please note that although some of these cards have student and business versions, this review does not apply to them. Also, all of these cards are eligible to utilize the ShopDiscover network and earn additional Cashback bonus amounts through that program.
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Their most popular card and most basic offering, the Discover More card gives 1% cash back on all purchases and 5% cash back in rotating categories – for example, summer fun in August or holiday shopping from October-December. The categories change with the seasons and you need to sign up in order to save the 5%; you won’t be automatically enrolled. If you forget to sign up for the extra cash back bonus, you’ll only get the usual 1% cash back. Also, there is always a cap on the amount you can earn with the 5% cash back bonus – usually $1500. That’s a $75 maximum bonus amount per period, but if you earn the maximum each time, you could get up to $300 back per year from the 5% extra bonus alone. The 1% cash back offer is unlimited, so the more you spend, the more you get back.
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This card gives 2% cash back on your first $250 in purchases at gas stations and restaurants each month and 1% cash back on all other purchases. There aren’t any rotating categories and you can’t earn more than 2% cash back in any category. This card is targeted toward consumers who spend more on gas and restaurants and want to maximize their cash back in those categories, but the savings potential is less than it is for a customer who takes full advantage of the rotating categories bonuses on their Discover more card.
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The Motiva card is for the person who wants to be rewarded simply by paying their bill on time every month. For each on-time payment, you’ll get a bonus equal to 5% of your interest charges that month. They call this the Pay-on-Time Bonus, and it can be great if you carry a balance each month and have a lot of interest charged to your account. However, if you don’t carry a balance, then you won’t ever be charged any interest – and you won’t get any reward beyond the 1% cash back offer and your ShopDiscover benefit. So this card is really only for the person who has a large balance that they are trying to pay off, who pays on time each month and wants to be rewarded for it.
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This card offers “miles” as a reward, but don’t think that these miles are the same as miles offered by the frequent flyer program that you use. These miles are more like points, which you then exchange for a cash reward that you can use to make travel-related purchases, such as airfare, cruises, hotel stays, car rentals, and vacation packages. It’s essentially still a cash back card, with bonuses offered on travel and restaurant purchases. You’ll also earn double miles on travel and restaurant purchases up to $3,000, and one mile per dollar for all other purchases. To use your miles for a travel discount, you can redeem them at a rate of 10,000 miles per $100 travel credit. You can also redeem miles for gift cards, cash, or charity donations, starting at 1,000 miles (for gift cards) or 5,000 miles (for cash or charity donations).
This card is marketed toward travelers and called a “miles” card, but that’s more of a gimmick than anything else. The redemption terms are more complicated than those of the basic Discover More card, and it may not offer greater cash back – it depends on how you use it and if you are savvy about using the terms to your advantage.
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This is also called a “miles” card, and it’s unique in that it’s the only Discover card to carry an annual fee. At $60± a year, is the fee worth it? Instead of earning one mile per dollar, like the Miles card, you earn unlimited double miles. It also gives you two extra miles for every dollar you spend in the ShopDiscover mall. So, if you make a purchase through ShopDiscover, you can actually earn four miles per dollar. That’s why this card carries an annual fee – it gives you a higher miles earning potential. Whether or not it’s worth the fee will depend on how heavily you use your card, whether or not you carry a balance and pay a lot of interest, and if you redeem your miles for the maximum reward. You redeem your miles the same way you do with the miles card, and at the same rate.
Cash Back Caveat
Here’s something in the fine print of every cash back Discover Card that you might have overlooked: to get the standard 1% cash back reward, you must first spend at least $3,000 annually. For most people, this amount will be easily spent, but it’s worth noting. That cash back will only accrue at a rate of .25% until you hit the $3,000 threshold.
ShopDiscover and Rake in Rewards
To help you spend that $3,000, take a look at Discover’s online mall, the ShopDiscover network. Here, you can buy many of the things you’d buy anyway, but if you purchase them through Discover’s online portal, you’ll get extra cash back. Instead of going directly to Shoes.com, for instance, go through Discover’s network, use your Discover card to pay for your purchase, and earn a 15% cash back bonus on your purchase. This bonus, unlike the 5% in rotating categories, is unlimited. That can really add up! And with literally hundreds of retailers in their network, you can shop virtually anywhere you want. Get 5% back from the Apple store or Best Buy on big purchases and really see the savings. Buying a $1,200 Apple laptop? Buy it through ShopDiscover and get $60 back. This is where the really smart credit card user hits the jackpot.
The Best of the Rest
What are some of the other good things about doing business with Discover? Why do so many American households choose Discover when they are looking for a credit card? Here are some things people love about Discover card, and why they tend to keep using their Discover cards year after year:
- Their online banking center features an easy-to-navigate layout that shows all your accounts on one screen and allows you to keep track of balances, charges, and payments easily. You can transfer funds and make a payment, set up automatic transactions, change your contact information or redeem rewards, simply and securely.
- Personalize your account in lots of ways – from choosing your card design (they have over 100 different looks to pick from) to customizing your email reminders so you’ll know when you’re nearing your credit limit or payment due date.
- Complete fraud protection - you’ll never be liable for an unauthorized charge
- Travel assistance – including baggage tracking, car rental insurance, flight rebooking
- Automatic bill payment – set up your household bills with Discover card and earn 1% cash back on all your monthly expenses, from the cable bill to the electric bill
- Financial tools like the Spend Analyzer and the Paydown Planner help you take control of your financial future
Are You Ready to Discover?
What’s our bottom line? No one gives you rewards quite like the Discover network. Whether you want to be rewarded with cash on all your purchases, if you’ve got the travel bag and want to rack up miles, or you like getting rewards just for paying on time, there’s a card for you. Discover it today – apply for your Discover card at Credit-Land.com.
± Click apply for Terms & Conditions.