Q: I was using my Discover card at the grocery store and after swiping, it asked if I wanted cash back. I selected “no” because I don’t know how this works. Will I get ripped off paying cash advance interest rates for using this?
Discover Cash Over is no longer available. The following information is for reference only.
A: The feature you are referring to is Discover Cash Over. Not all stores offer it. Here is a list of Cash Over merchants. As you see most of the retailers are strictly supermarkets, but there are others which are not, most notably Walmart and Dollar General.
At these stores, you can get cash back at the register during checkout. The amount you can get depends on the store. But whatever the case may be, Discover has a limit for Cash Over transactions of no more than $120/day per account.
Okay so what’s the catch?
Would you believe me if I told you there wasn’t one?
When you use this feature, it works in a somewhat similar manner to getting cash back using an ATM/debit card.
The extra amount (above the purchase price) will show up on your credit card bill. For example, if you made a $17.24 purchase at Walmart and used the Cash Over benefit to get $40.00, then on your card statement it would show $57.24 ($17.24 + $40.00).
There are no fees for using this. With credit card cash advances, interest begins accruing immediately (no grace period). However the nice thing about the Cash Over feature is that it’s treated the same as a purchase – there’s no interest charged if you pay your credit card bill in full each month.
So should you use it?
Yes! If you need cash, using your Discover for cash back at the register will save you a trip to the ATM. However, my answer is geared towards people who always pay their bill in full. If you don’t, then the Cash Over will accrue interest (the same way any other purchase does) and paying interest on this money wouldn’t be logical.