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People who want cashback, without the frills, definitely need to take a look at the Discover It card. There’s a $50 sign-up bonus, but right now it seems this offer is off the table for new cardholders. It’s also one of the few credit cards out there with no annual fees and offers a competitive 5% cashback rate.
The cashback rotates different categories every quarter, but it’s not too complicated to understand. For example, you can get 5% cashback for groceries for the first quarter of the year, restaurants for the next quarter, and so on.
Take note you need to activate the card every quarter, and there’s a maximum spending cap of $1500 for the 5% rate. Once you reach the quarterly cap, you’ll get unlimited 1% cashback on all purchases without the need for activation. It’s safe to say that it can be the best credit card for beginners.
Additional Perks & Benefits
You’ve just learned the basics of how the card works, but there are extra perks and benefits too. Here’s a list of what you can get from it:
- Get Double Cashback – The sign-up bonus isn’t very lucrative but it makes up for that by doubling the cashback you’ve earned for a year – with no limit. If you’ve received $600 in cashback, you’ll get an additional $600. This totals to $1200 credited to your account.
- Redeem Your Rewards in Different Ways – You can use the cashback you’ve earned to make direct deposits to other accounts, shop on Amazon, donate to charities, and even get gift certificates. (Extra tip: There are times that a $20 GC will only cost $15 in cashback rewards so you can get extra bang for your buck).
- Introductory 0% APR – There’s an introductory rate of 0% APR (Annual Percentage Rate) for the first 14 months after signing up. This means you can purchase expensive items or transfer balances with no interest rates at all. The regular rate then becomes 13.49% – 24.49% after the 14th month.
- Free Access to FICO Score – You can use the card to keep track of your FICO Score so you’re always up to date on your credit score.
- Zero Transaction Fees for Purchases Abroad – Most credit cards have a 3% foreign transaction fee on top of the item price. With the Discover It Card, you can splurge all you want if you’re a frequent traveler.
Who The Card Might Not Be For
Now, some may think that this is the best credit card for beginners, but there are also a few disadvantages to it. There are always two sides to a coin, so we’ve rounded up some of the reasons why you may want to pass on this one.
- Discover isn’t as popular as Visa or Mastercard for local merchants in the US, so there’s a big chance that it won’t be accepted by merchants abroad too. You need to get a different card for your other purchases that are not included in Discover’s rotating cashback categories.
- You need to keep track of the rotating categories for the 5% cashback and activate it every quarter. It sounds like a simple task, but you can miss out on these little things if you’re busy or disorganized.
- A $1500 quarterly spending cap at 5% cashback is a pretty good deal, but if you’re spending a lot more than this, it goes back to 1%. You can choose a similar card offered by other companies instead.
Discover It VS Discover It Secured – What’s The Difference?
The Discover It card is a regular cashback card that earns 5% on rotating categories. It requires an applicant to at least have good credit before getting approved for the card.
Meanwhile, the Discover It Secured credit card is for applicants who are trying to build their credit. For everyone’s information, secured cards require applicants to put in a security deposit before they get approved for the account. They report to the three major credit bureaus – Equifax, Experian, and Transunion – so you’re able to increase your credit score.
It serves as collateral in case cardholders aren’t able to pay their debts and it also encourages cardholders to pay their debts on time. Credit card issuers get paid while cardholders get to build their credit. It’s a win-win situation for both sides.
Most secured cards don’t have extra features or cashback at all, however, the Discover It Secured card offers both.
- 2% cashback at gas stations and restaurants
- Double your cashback in your first calendar year
- No foreign transaction fees
- Zero annual fee
What’s also great about the card is you’ll get a chance to withdraw your security deposit if you’re a responsible credit card user. You’ll also get a free FICO Score 8 from Transunion.
What We Think About The Discover It Card
The card might not be for people who are “seasoned veterans” in the credit card game. You can’t maximize your returns if you’re a big and long-term spender, because of the rotating categories and spending cap.
However, you can use this card to make all of your big purchases like buying appliances, furniture, and gadgets. Just make sure to do it within the first 14 months of signing up so you can take advantage of the 0% APR.
The card is perfect for beginners, particularly fresh graduates, who want to improve their credit score. It’s also suitable for travelers because of the zero foreign transaction fees.