Discover’s New 5% Cash Back Categories Could Help With Holiday Costs
Discover recently announced its 5% cash back categories for the fourth quarter, including a new category. Learn how much you can save.
The holidays are right around the corner. And with gas prices remaining ulcer-inducing, getting a head start on your plans isn't a bad idea.
On this note, Discover recently announced its 5% cash back categories for the fourth quarter for its Discover it® Student Cash Back and Discover it® credit cards. It's a good mix of categories that can help you save on expenses you were going to make anyway during a very expensive time of the year.
I'll break down which categories made the 5% and things to consider with these perks.
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Discover's 5% categories revealed
Here are the 5% categories:
- Entertainment: This is the first time entertainment made Discover's 5% cash back list. Earn 5% back on movies, concerts and live sports.
- Restaurants: For the second time this year, Discover cardholders receive 5% cash back on dining in, takeout, delivery apps (Grubhub, DoorDash, Uber Eats) and catering. Restaurants located inside of or affiliated with another business, such as hotels or retail stores, and establishments classified as a bakery may not qualify.
- Utilities: Just as Super El Niño keeps energy bills high, these cards provide some relief by saving you 5% on recurring bills, such as electricity, water, internet and phone services.
*Redemption value is one cent per point, so $1 per $100 charged.
Overall, this makes the fourth-quarter lineup appealing. The 5% back on entertainment comes in handy with football season, holiday music tours and blockbuster movie releases all happening.
The holidays are a big time for dining out or using carryout services for gatherings. And the utility perks come in handy if you're looking to shave a few bucks off essential expenses.
Sounds good, but there's a catch, right?
Yes, there are a few things you should consider. First, you'll only earn 5% back on the first $1,500 charged for combined categories. That said, saving $75 on purchases you were going to make anyway isn't bad and can be a welcome relief at a time of the year when there isn't much.
If you plan to use it for utilities, many companies and municipalities charge a service fee for credit cards. My water company charges $2.95 to pay via credit or debit card. This can eat into the 5% back.
However, if you're using it for your internet or cell phone bill, you're less likely to encounter other charges. That's why I recommend planning now to prioritize which categories work best for your needs.
And don't forget you won't automatically earn this incentive just because you're a cardholder.
Don't forget to do this
You won't receive the 5% back automatically unless you activate it; here are the ways to do so:
- Online: Log in to your Discover account, find the Cashback Bonus page and click on Activate.
- Mobile app: Open the app, tap Rewards (at the bottom of your screen) and tap Activate.
- Phone: Call Discover at 1-800-347-2683.
- Email: If you receive a promotional email from Discover, click on it to activate the 5% bonus on your account.
I have this card and can tell you from experience that it's easy to do. My tip is to set a reminder on your phone a week or two before the 5% categories change quarterly and use only the categories you need. This helps you maximize your cash back and avoid making purchases just to earn the perk.
One of the best cards for simplicity
As I mentioned, this is one of the credit cards in my family's lineup. We like it because the first year you earn an unlimited dollar-for-dollar match on your cashback bonuses. With this perk, you could use it for regular expenses all year and earn a sizable bonus.
And the 5% categories are usually very good. While that $75 bonus might not seem like much quarterly, we've had the card for over five years and always hit the bonus cap, meaning we saved around $1,500 on expenses.
Therefore, the savings add up. Is it the best card for everyone? No. Avid travelers would benefit from the best travel rewards credit cards, and issuers like American Express offer better perks on streaming, shopping and dining. Also, you can't use your Discover card at Costco; some small businesses won't accept it either.
Still, if simplicity is your aim and you're looking to shave some money off holiday costs, the Discover it card is worth considering. And if you're looking to compare it to other of the best cash back credit cards, here are some of our top picks:
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