Cash back from Discover? So, how good is the program? Well, on its face, not very. Used for normal everyday purchases, the cash back is according to the following schedule: 0.25% if the purchases are part of the first $1,500 in purchases during the anniversary year; 0.50% if the purchases are part of the second $1,500 in purchases; and 1.0% if the purchases are part of the purchases in excess of $3,000 during the anniversary year. So, depending on your usage volume you will earn up to a marginal rate of 1% cash back. Not bad, but we all know that there are plenty of cards that offer 1% from the first dollar.
But is that the whole story? Well, let's look at the language of the cash back schedule once again. The impression is that if you spend $5,000 in one year you will make $31.25 ($1500*.25%+$1500*.50%+$2000*1.0%). However, it depends on how you spend that $5,000. Let's say it's the first day of your card's anniversary period and you buy lunch at McDonald's for $4.76. Then a TV at Best Buy for $289. Then you buy dinner to go at Koo Koo Roo for $6.24 so that you can enjoy it in front of your new TV. Expensive day. You spent $300 even. But I get some cash back right? Yea, seventy five cents. Okay, fine but I'm buying an engagement ring tomorrow. Another expensive day, but at least it will mean big cash back rewards. So tomorrow, you go to Robbins Brothers (which you shouldn't do, see my post I Bought An Engagement Ring!) and plunk down $4,700 even on the rock. There $5,000. At least I get $31.25 back right? Sorry, the $4,700 purchase was "part of the first $1,500." You get $7.50 back.
:sadwave:
