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The Discover it® Cash Back credit card offers 5% cash back in categories that rotate every three months, for no annual fee. You need to activate your 5% categories ahead of time, and you’ll have to deal with a quarterly spending limit.
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Discover it® Cash Back cardholders, rejoice! You can earn rewards at a great rate for no annual fee, and you can plan out your spending for the whole year.
From January through March, you can earn 5% cash back at:
But take note of the details:
You can visit Discover’s website to activate your categories right now.
Discover comes out with a new cash back calendar every year, though some categories (like grocery stores, gas stations, restaurants, and Amazon) usually make repeat appearances.
Here are the 5% categories for 2021, along with last year’s for comparison.
|Quarter||2021 Categories||2020 Categories|
|January – March||
|April – June||
|July – September||
|October – December||
Discover is good enough to release the entire calendar for the year, usually a bit before the previous year ends. This gives you some time to plan out your spending, and if you’re considering applying for the card, you can see how useful it will be in that first year. The other 5% rotating category card of note, the Chase Freedom Flex℠ (Review), releases the next quarter’s categories only a few weeks before the quarter begins.
The Discover it Cash Back has a set of features that matches most other Discover cards, with common benefits like the Credit Scorecard and SSN/new account alerts. You’ll get a nice intro purchase APR in case you need to stretch out your spending a bit, along with a good balance transfer offer (but this card is meant mainly for earning rewards on purchases).
The cash back you earn can be redeemed for statement credits or direct deposits, which are the easiest methods. The amount redeemed will just be credited to your card account, or sent to your bank account.
But Discover will give cardmembers a bonus on gift card redemptions, making that the most valuable redemption method. You’ll get at least $5 added to each gift card redemption, and sometimes $10 or even more.
A $5 bonus on a $20 gift card is a 25% increase — pretty significant, and worth exploring. (Some other reward programs, like Amex Membership Rewards and Chase Ultimate Rewards, have better redemptions for travel.)
Gift cards take a bit more time and effort to use, however. You can get digital gift cards in some cases, but have to wait for a physical card to be mailed in others. And then you need to actually have a purchase in mind at the associated store (or they could be good gifts).
So if you’re looking for easy cash back, statement credits or bank account deposits are probably the right moves. But browse the gift card selection, too; if you’ve got an upcoming purchase, or shop at any of those stores with regularity, a gift card will give you more bang for your buck.
The Discover it Cash Back’s rotating categories give it some variability over the course of a year, which could prove useful. But since its 5% categories change every quarter, you’re typically only earning a good rate on those purchases for three months out of the year.
So it’s nice to have some other cards on hand for other expenses, letting you earn a good rate no matter where or when you shop.
The Citi® Double Cash Card – 18 month BT offer (Review) is easy to recommend for general spending thanks to its flat 2% rate on every purchase (must pay at least the minimum due on time). No categories to worry about, rotating or otherwise; just pull out the Double Cash whenever you’re not spending in a Discover 5% category.
You might say that two 5% rotating category cards is too much (and you might be right). But credit card aficionados might enjoy having two different sets of 5% cash back categories throughout the year.
The Chase Freedom Flex℠ (Review) is similar to the Discover it Cash Back. It’s got the same $1,500 quarterly limit, and you need to activate your categories. But with the Freedom Flex, after you activate you’ll earn 5% back on every eligible purchase you made throughout the quarter, even purchases made before you activated. Those rewards will be retroactively added to your account.
In 2019 there was no overlap between the Discover and Chase category calendars at all. If you had both cards you would’ve had a wealth of 5% opportunities all year. But Chase only releases the Freedom Flex’s upcoming categories shortly before they’re available, making it difficult to plan.
|Quarter||2020 Categories||2021 Categories|
|January – March||
|April – June||
|July – September||
|October – December||
The Freedom Flex also provides some other great rewards, in addition to its quarterly bonus categories:
Here’s another 5% cash back category card, with a sweet twist: You get to choose two of your own 5% categories (and a 2% category!) each quarter, giving you unmatched flexibility as your spending habits change throughout the year.
The categories include some rare finds that Discover doesn’t usually cover, like electronics stores, streaming services, and department stores. There are even perpetually useful categories like cell phone providers and home utilities (very rare finds). It’s one of the best credit cards for some of those expenses.
With Discover, you’re stuck with whatever they’ll give you; but the Cash+ lets you adjust as the year progresses, so you can set up the perfect categories to complement the Discover rewards calendar.
|5% Cash Back Categories (Pick Two)|
|Ground Transportation||Fast Food||Cell Phone Providers|
|Department Stores||Home Utilities||Select Clothing Stores|
|Electronics Stores||Sporting Goods Stores||Movie Theaters|
|Gyms/Fitness Centers||Furniture Stores||TV, Internet & Streaming Services|
|2% Cash Back Categories (Pick One)|
|Gas Stations||Grocery Stores||Restaurants|
Excited? We covered the major card features here, but you can dig deeper in our Review of the Discover it® Cash Back Credit Card.
Just don’t forget the main rule when it comes to the rewards: Activate your cash back categories before each quarter starts, because you won’t start earning at the 5% rate until you do. Consider setting up Discover’s email alerts, or set your own reminders.
Brendan has been writing about personal finance for over eight years, and is now taking on the challenge of bringing high quality credit education to the masses. He makes sure that Credit Card Insider is covering the most important credit topics transparently and precisely, and that we have up-to-date reviews of credit cards so you can find cards that are right for you.
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