Executive Summary -
At last, we arrive at the end of our review of the Discover IT Card. Before reaching our conclusion, we'll first look at what we like about the card. We'll then do some peer comparisons and finally our opinion on who should get this card.
The six million dollar question you would likely to be asking is if this is a good card. There are several angles to approach this from.
The first way is to compare it with it's predecessors. And in almost every way, the Discover it® Card is an improvement over the More Card. The first improvement comes in it's cash back formula. Previously, you have to spend at least $3,000 a year before you could earn 1% cash back. Now, 1% is the base rate from the get go.
As far as rewards go, the card retains the features of previous Discover Cards in the form of the 5% bonus cash back category and online shopping portal. But it has added a couple of new nifty features that might appeal to certain folks.
For example, even if you pay late (for the first time), there is no penalty fee and your APR will not increase. The only other card that explicitly has this feature is the Citi Simplicity Card (which however, is a plain vanilla card). How valuable this feature is to you depends on how you manage your finances. If you are the sort of person that stays on top of things and pay your bills in full, then you would not be as concerned about this as someone who has had bad experiences with customer service when they accidentally forget to mail the check on time (my philosophy is always to set up auto payments from bank to solve this problem).
Speaking of customer service, Discover has all their reps located in the US. That means you will be speaking to a person from the same country and not someone from overseas that knows English but has a hard time understanding you (and vice versa). If you are a person who feels very strongly about us off-shoring jobs abroad, you would be pleased to know that you will be speaking to a US call service center.
Another great feature about this card is that there is no foreign transaction fees. This will come in handy if you happen to travel abroad since most issuers charge about 3% fee if you use it overseas. Discover is one of two issuers (the other being Capital One) that has eliminated foreign transaction fees on all of their cards. And they are quite widely accepted in Europe and around the World (contrary to popular belief.)
Peer Comparisons - This card also share some similarities with a couple of it's peers like the Chase Freedom and the Citi Dividend Card. All three cards share the 5% rotating category cash back system. It is really hard to compare them because they have different categories (which see to change every year). The other real difference is that starting in 2013, Discover (like Citi) appears to be announcing their 5% categories quarter at a time whereas Chase has announced their full year's calendar.
The real thing to compare is that shopping portals. In this regard, Discover's portal allows you to earn more cash back (on average) because the lowest payout starts at 5%. I contrast, both Chase and Citi has their cash back starting at 2%. Very often, a merchant who is listed on all three portals will have the highest cash back payout with Discover. Having said that both Chase and Citi has more merchant partners (more boutique ones).
The ways in which you can redeem your cash back differs for the three cards. The Citi Dividend for example is a pure cash back card where you can only redeem your rebates for cash back. With the Chase Freedom, you earn Ultimate Reward points, which can be redeemed for cash or any of their rewards from their program. This includes booking airline tickets or hotels with points, gift cards or merchandise. In fact, the Chase Freedom is a true hybrid cash back and rewards card. Discover, on the other hand, is really more of the cash back breed. You can obviously redeem for cash back in the form of a check, direct deposit or statement credit. But you can also donate them to charities and redeem them for gift cards.
As we explained earlier, redeeming them for gift cards represent the most value because for certain merchants (mostly hotels and cruises), you can get double the value in their gift cards. If you look at it this way, this card has best opportunity to get the redeem your cash back among it's peers.
The Discover it® Card beats it's peers in terms of having no foreign transaction fee, having no late fees if you have a first late payment and having your APR stay intact if you go over your credit limit.
Who Should Get This Card? - Overall, I think this is an absolutely great card to get. Question is how should get this? Well, this card is ideal for those looking to earn cash back from their credit cards. And in particular, you should get this card if:
You do lots of online shopping
You have already a cash back card like the Blue Cash Everyday, this card would make a perfect compliment since it has features that traditional cash back cards do not have (like 5% cash back categories and online shopping portal)
You travel once or twice a year on cruises since you can get 5% cash back when booking with cruises through the shopping portal (eg. Carnival Cruise, Celebrity X, Norwegian)
You are particular over customer service and want to speak to a US based representative
You travel abroad occasionally and do not want to pay the 3% foreign transaction fee
You have had bad experiences with a late payment or going over your credit limit and want some protection from late fees and increase in APR
Conclusion - This is one of the top cash back cards available in the market today and we would highly recommend this card for those looking for one.
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