10% Cash Back For One Year? Yes, It’s Possible

I hate click-bait headlines, and this one is perilously close, but once I explain the details of this card, I’m sure you’ll forgive me.  I’m doing it for you.

Chase, Citi, and AMEX deservedly get most of the attention in the credit card advice blogs.  They all offer lots of cards to fit your goals (points, airline miles, hotel points, cash back, personal or business, etc.), and most of my new card applications are with these three banks.  Why?  Because I can get lucrative signup bonuses with all of them and also earn valuable points or miles moving forward.  

Discover It

This little wallflower of a card could put a lot of cash back in your pocket

Meanwhile, Discover sits in the background, quietly minding its business.  What a pity.  Because if cash back is your goal, you’re really leaving a lot of money on the table without the Discover It card.

The Discover It card offers no big flashy signup bonus to get you to apply, and that breaks my heart.  But, like the terrific Chase Freedom, it offers rotating quarterly categories in which you will earn 5% cash back on your first $1500 in spending.  For example, during this quarter (Q4, 2016), you earn 5% back on Amazon.com, Sam’s Club, and Department stores.  Those are great categories, especially for holiday spending.  For next quarter (Q1, 2017), the categories will be Gas, Ground Transportation (think cabs, rail, Uber, etc.), and Wholesale Clubs (strictly speaking, this excludes Costco warehouses since Costco only accepts Visa now, but I will show you a workaround below).  Guys, 5% cash back is just about as good as it gets…except…

For the remainder of 2016 and the first quarter of 2017, warehouse clubs provide the opportunity to earn 5% cash back. And for your first year, it’s 10% back!

For your first year with the Discover It card, Discover will double your cash back!  During your first year, you will receive (on each monthly statement) 5% back on purchases in the rotating categories and 1% elsewhere.  At the end of that year, however, Discover will total up your earned cash back and give you that same amount in a lump sum!  So, 1% becomes 2% and 5% becomes 10%!  As I said, for one year, this card is simply unbeatable for cash back.

So, just for the heck of it, let’s run some numbers.  To make it easy, suppose you spend $1000 each quarter in the 5% categories.  That’s $4000 in spending during your first year.  You would earn $200 back during the year and another $200 at the end of that year.  That’s a terrific rate of return, and it’s only on spending in the 5% categories.  Remember, you also earn 2% on all other spending (1% during the first year, another at the end of the first year), and if cash back is your goal, you can’t beat 2% on general spending.

10% Cash Back for a full year in select categories with the Discover It card is as good a cash back option as you will find.

Now, I know a lot of you are Costco maniacs, so let me tell you how you can still get 5% back on your Costco purchases with Discover when Warehouse Clubs are a 5% category, even though you can’t use Discover cards in the warehouses.  Simply buy Costco cash cards through Costco.com.  Costco warehouses only accept VISA now, but Costco.com accepts Discover as well!  Now, using a Costco Cash Card is a bit more work (unless your purchases always magically come out to nice even amounts such as $25 or $100!), but 5% is 5%.  And in your first year, it’s 10% when Warehouse Clubs are among the 5% categories.

if you have read this blog at all, you know I am not a cash back chaser because I find that I can get more value (usually) by chasing travel rewards, but 5% is very hard to beat.  10% is impossible to beat, and that is why I am so sad to see my first year with my Discover It come to an end.  Your 10% cash back journey is just starting.  Safe travels!

Hope you found this helpful.  If you enjoyed this article, please share it or email it so others can learn from it as well.  Let’s help as many people as we can!

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