How I use my Discover it Cash Back Card

The Discover it® Cash Back was one of my first rewards credit cards. I’ve had it for over a year now, and I couldn’t be happier with the value it offers.

One of the most popular cash back cards on the market, the Discover it Cash Back offers 5% back in bonus categories which rotate each quarter (up to $1,500 in combined purchases per quarter, then 1%), upon activation. With such a generous rewards rate, the card provides plenty of earning potential.

Here’s how I use the card to maximize its potential and get the most out of my Discover it Cash Back.

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I earned the sign-up bonus

The Discover it Cash Back doesn’t earn a sign-up bonus in the traditional sense.

Normally, there’s a spend requirement you need to meet in a certain timeframe to get a bonus, which is also a set amount.

The Discover it Cash Back offers Cashback Match instead. Everything you earn in the first year with the card gets matched, meaning your first-year cash back doubles.

I made $269 in cash back in my first year, so Discover gave me another $269 on my first card anniversary, bringing my annual earnings to $538. Not a bad first-year value for a no-annual-fee card!

I’m disciplined with bonus categories

Memorizing rotating categories and juggling multiple cards isn’t for everyone. However, I’m the kind of person who finds it kind of exciting.

I make a point to look at the cash back calendar as soon as it’s released to have an idea of what’s to come and see if there are any big purchases I can plan to earn extra points on.

When Discover sends me an email informing me the next quarter’s categories are open for activation, I activate right away. It’s easy and only takes seconds, since all you need to do is to click a single button.

I also always memorize the current quarter’s categories and adjust my card strategy accordingly.

For example, right now, the bonus categories include grocery stores. Usually, I use the American Express® Gold Card for grocery purchases to earn 4 points per dollar. But this quarter, I’m using the Discover it Cash Back to earn 5% cash back instead – at least until I reach the quarterly cap, when I’ll switch back to my Amex Gold.

I don’t get carried away

It can be tempting to overspend in bonus categories. Let’s be honest, who isn’t tempted by extra cash back? Unfortunately, giving in to this impulse isn’t the best news for your budget.

I try not to let bonus categories dictate my spending. The point is to earn rewards on purchases I’d make anyway.

I don’t maximize bonus categories each quarter and that’s okay. Not all of them fit my spending – I only make sure to make the most of those that do.

I treat my cash back earnings like savings

The beauty of cash back cards is that you rarely need to worry about redemption value. One cent of your cash back earnings remains 1 cent whatever you choose to do with it.

Discover provides plenty of options to redeem rewards. Most often, I redeem for purchases on Amazon, apply cash back to my balance or transfer my earnings to my checking account.

I prefer to allow cash back to pool in my account for a while and use it as my “guilt-free” savings, meaning these savings aren’t a part of my budget.

Sometimes I use it as a self-care fund. I usually have a hard time making purchases I haven’t planned for in advance, be it clothing, cosmetics or home décor, thanks to persistent financial anxiety. It’s easier for me when I use cash back on such things. This way, I spend money that was never in my budget in the first place.

Alternatively, I use cash back for unexpected expenses. I have an emergency fund, but I don’t like dipping into it unless I absolutely have to. Cash back can be very helpful in this situation as well.

For instance, I had to get new tires last month. I could’ve pulled $900 from my emergency savings. Yet, with high expenses I expect in the first half of 2022, it’d take me a while to replenish such a sum.

Instead, I used $480 in rewards from the Discover it Cash Back, so my new tires only cost me $420. That was still a hit to my monthly budget, but much more manageable than $900. Plus, my emergency fund stayed intact.

I keep an eye on special offers

One of the reasons I love Discover is its generosity with special offers.

I often see targeted offers from Discover when shopping on Amazon, like 30% or 40% off eligible items for spending at least 1 cent of cash back. This is fantastic value, and I take advantage of such offers whenever I can.

See related: Which is the best card to use on Amazon.com purchases?

Recently, Discover also emailed me a targeted offer of 0.9% APR for six months. I don’t carry any credit card debt, but I accepted the offer anyway. You never know when a financial emergency may hit, and having access to credit at such a low interest rate can be incredibly helpful.

Bottom line

This card is a keeper.

After I got my Cashback Match, the Discover it Cash Back doesn’t earn me as much as it did in the first year. Still, to me, the card is a keeper. The cash back rates are hard to beat, and I enjoy all the targeted special offers I receive.

The Discover it Cash Back provides excellent value for a no-annual-fee card. It requires some maintenance in tracking bonus categories, but I don’t mind. I memorize them diligently since I’m always excited about the prospect of high cash back rewards.

This is truly a top-notch credit card product, especially if you put some effort in your credit card strategy.