Cash back for the Savvy Consumer
The Discover it® Balance Transfer card is a contender in the cash back arena. Each purchase earns you 1% cash back with no purchase limit. Furthermore, you can earn 5% on purchases within rotating categories. To tap into that 5%, you have to sign up each quarter. You’re capped at $1,500 per quarter for 5% cash back, but you still earn 1% on purchases totaling above that. At the end of your first 12 months, Discover will match your cash back rewards. Options for redeeming your rewards include: Amazon.com purchases, donations, direct deposit and gift cards. You can redeem in any amount starting with a 1 cent credit to your account.
Card perks include no annual fee or foreign transaction fees. The purchase intro APR is 0% for 6 Months and the balance transfer intro is 0% for 18 Months. After the intro period has ended, your APR will be 14.24% - 25.24% Variable based on your creditworthiness and the Prime Rate. The APR applies to purchases as well as balance transfers. Balance transfers will incur a 3% transaction fee.
Your first late payment has no penalty fee. After that, it’s up to $39 but carries no penalty APR with it.
Discover offers FICO® credit scores free on monthly statements, mobile and online. You can track recent scores and monitor your credit on the go.
You also always reach live customer service each time you call. Discover features 100% U.S. based customer service.
No annual fee – You don’t have to budget for an annual fee with this card.
No foreign transaction fee – Take this card with you as you travel without any fear of transaction fees.
0% intro APR – The intro APR for purchases will be 0% for 6 Months and for balance transfers 0% for 18 Months of having the card.
Cashback Match – You receive a 100% match for the rewards you earn in the first 12 months.
5% cash back bonus – Earn 5% cash back on rotating categories of purchases or select merchants up to $1,500 a quarter. All other purchases receive 1% cash back.
Redemption options – You use the points you earn as an electronic deposit to your bank account, gift cards (starting at $20), charitable donations and for Amazon.com purchases.
Who It Benefits
The Discover it® Balance Transfer card is ideal for a committed credit card user. While no annual fee is a great perk, the real draw of this card is the potential cash back earnings. At 5%, it ranks higher than many other cards, but it’s not without some effort on the consumer’s part. You have to activate the bonus reward categories each quarter. It’s not a hassle for those who find themselves logging in to check accounts frequently. However, if you like everything to be on a low effort auto-draft, you may find it hard to remember to opt in to the bonus categories each quarter.
For the consumer who is committed to earning rewards, the first-year cash back match is a great benefit. There’s no limit for that bonus, and you stand to earn a good amount if you maximize the purchase categories throughout the year. Each quarter features a category or preferred merchant for purchases that earn you 5% cash back, up to $1,500 each quarter. With Amazon.com, restaurants and home improvement as a few of the categories, you’ll rotate genres every few months.
If you use your card mostly for gas, travel or dining out, you may not find this card a perfect fit. Because the categories change each quarter, you could miss out on earning that 5% if your purchases don’t fit the quarter’s category.
As with any credit card, you’ll want to do the math and take a look at your purchase history to see if this card makes sense for you.
How It Works
The Discover it® Balance Transfer card is a rewards card where you stand to earn cash back up to 5% on certain categories. Each purchase earns you a baseline 1%. You earn 5% on select purchases if you sign up for the rotating categories each quarter. You have to log on to your account every three months to manually sign up for the bonus categories each quarter. A sample year is gas stations, ground transportation and wholesale clubs for January through March, home improvement stores and wholesale clubs for April through June. July through September bonus category is restaurants (including fast food), and October through December have Amazon.com (perfect for the holiday shopping season!). The categories aren’t fixed and are subject to change each year.
Additionally, you earn 5% back on purchases only up to $1,500. This means the maximum you can earn each quarter using 5% cash back each quarter is $75. You’ll still earn 1% for every purchase outside the categories as well as if you exceed the $1,500 5% cash back limit.
Discover also offers a cash back match for this particular card. At the end of your first year of owning the card, you receive a 100% cash back match. This means if you earned $150 in rewards, Discover will double it to $300. This offer is only for the first year of using the card, but is a great benefit.
Options for point redemption include: gift cards, direct deposit, Amazon purchases and charitable donations.
This card features no annual fee and no foreign transaction fees. The purchase APR starts at 0% for the first 6 months. After that, the APR will be 14.24% - 25.24% Variable based on your creditworthiness. Balance transfer APR is 0% for 18 months and then 14.24% to 25.24% based on your creditworthiness. Cash advance APR is 27.24% Variable and comes with either a $10 or 5% fee, whichever is greater. Keep in mind that APR is variable based on the Prime Rate.
What’s the Catch
The catch to this card is its complexity. Not only do you have to sign up for the bonus cash back categories each quarter, you have to remember them as you make purchase choices. The 5% cash back sounds great in theory but might not be a good fit for your spending habits. If you don’t use the offered categories in the correct quarters, you may just end up earning the baseline 1%. And if that’s the case, there are all purpose cards out there which will earn you 1.5% or so for every purchase.
If you use your card for travel, dining out and gas you could earn more with a card that rewards those particular categories at all times — not just certain months.
Additionally, Discover cards are not as widely accepted as Visa or Mastercard. While more and more merchants accept Discover and American Express, there are still some places domestic and abroad, that only accept Visa or Mastercard.
Just the Math Please
The Discover it® Balance Transfer card comes with 5% cash back in rotating categories up to $1,500 a quarter. After the threshold is met, all purchases receive 1% cash back.
Additionally, Discover will match your cash back rewards after the first 12 months.
Balance transfers come with 0% intro APR for the first 18 months.
Rates and Fees
Annual Percentage Rate (APR) for Purchases
0% intro APR for the first 6 months that your account is open. After 6 months, your APR will be 14.24% - 25.24% Variable, based on your creditworthiness. The APR will vary with the market based on the Prime Rate.
APR for Balance Transfers
0% intro APR for the first 18 months that your account is open. After 18 months, your APR will be 14.24% - 25.24% Variable, based on your creditworthiness. The APR will vary with the market based on the Prime Rate.
APR for Cash Advances
27.24% Variable and will vary with the market based on the Prime Rate.
Penalty APR and When It Applies
How to Avoid Paying Interest on Purchases
Your due date is at least 25 days after the close of each billing cycle.
Discover will not charge you interest on purchases if you pay your entire balance by the due date each month. You will be charged interest on balance transfers and cash advances on the transaction date.
- Balance Transfer See terms and conditions of the application for intro and ongoing balance transfer fee information*
- Cash Advance $10 or 5% of the amount of each cash advance, whichever is greater
- Foreign Purchase Transaction None
- Late Payment None the first time you pay late. After that, up to $39
- Returned Payment Up to $39
The Discover it® Balance Transfer card has attractive benefits for those willing to stay involved with their credit card. The 5% cash back for rotating categories is nothing to sneeze at, nor is the first year match. If you maximize your purchases with the bonus categories, you stand to earn a fair amount of reward points.
There is a bit of a learning curve if you’re not used to interacting with your credit card company to opt in for categories. It’s a quarterly requirement to gain access to the 5% cash back bonus. And if you don’t opt in, you’ll only earn 1% cash back per purchase. With other cards offering flat cash back or non-rotating categories, you’d be losing out to use the Discover it® Balance Transfer card this way.
The 18-month balance transfer introductory 0% APR is another perk to this card along with no annual fee. But before you decide this is the card for you, just be sure to consider the options and make a decision based on your specific spending habits and financial situation.
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