Get the most from Discover Cash Back Bonus rewards & Shop Discover partners. Below are details explaining how the program works and what you need to know about recent changes to the program and the pros/cons for 2015.
How does it work?
Discover Cash Back Bonus is a credit card rewards program. With Discover’s most popular, the “it” card, you get 5 percent cash back bonus in rotating categories and up to 1 percent cash back bonus on everything else.
You can also get a cash back-bonus of 5 – 20% with online shopping completed through the ShopDiscover portal for cardmembers (hundreds of stores are part of the network). This accumulated bonus you earn on your spending can then be redeemed in a number of ways…
You have multiple redemption options
- Get a credit to your Discover credit card account (at face value, i.e. $50 statement credit will use up $50 in cash-back bonus)
- Get a direct deposit to your bank account (also at face value)
- Donate your cash back balance to charity (at face value)
- Get a Discover gift card with free shipping and no fees (at face value)
So those options are all at face value (where $1 in cash-back bonus equals $1 towards the reward) but there are a few options to bump up what you get in return:
- A couple years back, the Discover Cash Back Bonus rewards program added merchandise as a redemption option. Upon viewing the selection in my account, it looks like they have several hundred products currently available -– electronics, small appliances, toys … you name it. With some of these products, it looks like you can get more bang for your buck (amount of cash-back bonus it costs is less than the price in the store).
- Last, but certainly not least, a very popular option is to redeem your cash-back bonus for Discover-partner gift cards. There are nearly 200 companies participating in the Shop Discover and the face value of the gift card is more than the amount of cash-back bonus it will cost to redeem your cash back dollars (which is a great way to amp up your effective cash back earnings percentage. For example, you only need to use $20 of your rewards to get a $25 Staples gift card, $20 for a $40 Mrs. Fields Cookies gift card, etc.
How to maximize your cash-back bonus
For starters, take advantage of the 5% categories as much as possible. When it comes time to redeem your accumulated rewards, statement credits and direct deposits are only face value so skip those. The partner gift cards will almost always give you the most bang for your buck. At the very least, you can get a 25% increase ($25 gift card for $20 in rewards) or an 11% increase ($50 gift card for $45).
For non-category purchases, you receive a steady 1% cash back with the Discover it card. That’s on par with, or slightly lower than, the base cash-back rate on other cash-back rewards cards. Therefore, I recommend you do what I do: Use your Discover only for the bonus categories and online purchases through ShopDiscover participating retailers. Then, use another cash-back card that offers a slightly higher return on regular spending. The Capital One Quicksilver, for example, gives you 1.5% cash back on all spending.
Not a fan of Discover? Then check out the comparable Chase Freedom which gives 5% on categories that rotate each quarter and a full 1% on everything else.