|by Mr Credit Card|
Update 2/10/2012 – This post originally highlighted changes to the Discover Open Road Card back in October 2007. However, over the course of the last five years, we have seen devaluation in the rewards. We have updated the changes according to how it is like in the present day.
Changes in 2007 – The Discover Open Road Card (former Discover Gas Card) will be changing it’s rebate policy slightly on gas purchases from October 2007. At present, cardholders can earn 5% rebates on gasoline purchases at any station for up to the first $1,200 in annual gasoline purchases from with the card.
This will change in the following way from October 2007. You can still earn 5% rebates on gasoline purchase for the first $1,200 in gasoline spending. But each month, you can only earn 5% rebate for up to $100 in gasoline spending. Essentially, Discover is forcing cardholders to spread out the gasoline spending over 12 months. This will probably be difficult for many cardholders because it cost close to $50 to fill up many vehicles these days.
This is becoming an issue for credit card holders who want to earn 5% cash rebates for gasoline purchases. In the past, the Citi Dividend Platinum Select Card and the Chase Cash Plus Rewards Visa (now replaced by the Chase Freedom Card) gave cardholders a 5% rebates on gasoline purchases. The Citi Dividend Platinum Select Card now only pays 2% rebates on gasoline, supermarket and utility purchases, while the Chase Freedom Cash Visa Card (this was back in 2007)pays 3% cash rebates, with a cap on $600 in monthly expenditure.
Announcement in 9/2009 – Discover has announced that from January 2010 onwards, they will no longer be offering 5% rebates on gasoline and auto maintenance spending. Instead, cardholders will now earn 2% rebates on gasoline and restaurant expenses up up to $250 in monthly spend in these categories. While 2% rebates on dining expenses appears to be a fair deal, the reduction in the rebates on gas is another sign of the devaluation in gas rebates.
Observations and Opinions – Since the financial crisis in 2008, we have see a rapid pace of devaluations in credit card rewards (especially among cash back cards). In the good old days of 2006, cards paying 5% cash back straight on has was not uncommon at all. For example, the Citi Dividend Card, Chase Cash Plus (no longer around), Chase Freedom (back in the good old days) all paid 5% cash back on gas. Even the better gas stations paid 5% cash back on gas. But over time many of these cash back cards reduced their payouts on gasoline spending to 2% or 3%. Gasoline cards went a step further. Rather than paying a straight cash back, many are now resorting to paying a few cents rebates per gallon. At gas prices prices above $3 a gallon, the rebate percentages are actually very low.
The issue of devaluation of rewards deserves a topic on it’s own. But this news on Discover Open Road, unfortunately is now the norm rather than the exception.