Discover it® Cash Back review: Excellent value for strategic spenders

Since the Discover it® Chrome carries the same welcome offer and low fees, choosing between the Discover it® Cash Back or the Discover it® Chrome boils down to how you want to earn rewards. The Chrome card is simpler, earning 2 percent cash back at gas stations and restaurants year-round, but only for up to $1,000 spent in combined purchases per quarter across those two categories (then 1 percent). The Cash Back card earns higher rates with a higher limit, but you are at the mercy of the rotating calendar.

How you use the intro APR offer can also be a factor. The Cash Back offers a longer term on purchases but a shorter term on balance transfers. Although the Chrome appears to offer more reward consistency, the Cash Back has a much higher overall value.

I think the Chase Freedom Flex®* is one of the best overall no-annual-fee cards on the market. Choosing between the Discover it® Cash Back and the Freedom Flex is quite simple for me thanks to the Flex’s additional year-round bonus categories, superior benefits and ability to pool rewards with other Chase cards. 

While both cards have a similar intro APR offer, Discover has fewer fees and a lower ongoing interest rate. Unlike the Freedom Flex, the Discover it® Cash Back doesn’t charge foreign transaction fees, a penalty APR or a first-time late payment fee (up to $41 thereafter). Discover’s Cashback Match offer also has the potential to be more rewarding than the Freedom Flex’s welcome offer. Overall, the Flex is likely to provide better value, especially if you have another Ultimate Rewards card.

You’ll have the best approval odds with a good to excellent credit score. Check out Bankrate’s CardMatch™ tool to gauge your approval odds before applying (and temporarily dinging your credit score).

Discover announces the following quarters about a month ahead of their scheduled starting date. Here are the categories that were offered in 2024:

• • Q1 (January to March): Restaurants and drug stores 

  • Q2 (April to June): Gas stations and EV charging stations, home improvement stores and public transit

  • Q3 (July to September): Walmart and grocery stores

  • Q4 (October to December): Amazon.com and Target

You can redeem your cash back online or by calling the customer service line at 1-800-347-2683.

Discover offers a $50 to $100 referral bonus if you refer a friend to select Discover cards, including the Discover it® Cash Back. The maximum referral amount you can earn each year is stated in your referral offer, but Discover typically limits the total amount of referral bonuses to $500 or 10 referrals per year.

The primary criteria for a rewards or cash back card’s rating is its rewards value. This includes the card’s average rewards rate, estimated annual rewards earnings, intro bonus value and reward redemption value.

To estimate a card’s average annual rewards earnings, we first calculate its average rewards rate based on how much it earns in different bonus categories and how closely its categories align with the average person’s spending habits, according to data from the Bureau of Labor Statistics.

Based on this data, we determine a “chargeable” spend (which purchases are likely to be put on a credit card and earn rewards). This includes the following spending by category:

• Groceries: $5,200
• Dining out: $3,000
• Entertainment: $2,500
• Gas: $2,100
• Apparel and services: $1,700

Using this data, we assign a weighting to each of a card’s bonus categories. For example, a card’s grocery rewards rate receives a 23 percent weighting based on how much of the average person’s budget is spent on groceries. We also estimate the redemption value of points or miles from various issuer, airline and hotel rewards programs.

This weighting and rewards valuation allows us to estimate a card’s average annual rewards earnings — how many points or miles you’d earn with a given card if your spending was about average and you used the card for all of your purchases, as well as what those points are worth. We also use point valuations to determine a card’s welcome bonus value

With these calculations complete, we assign each card a score based on how its average rewards earnings, intro bonus value, rewards rate and redemption value stack up against other rewards cards.

We also rate cards based on how much it costs to keep them in your wallet or carry a balance.

To start, each rewards or cash back card is scored based on whether it offers an intro APR and how its ongoing APR compares to the rates available on other rewards or cash back cards.

We also score each card based on how its annual fee influences its overall value.

We consider a card’s annual fee in two ways — how it ranks relative to the fees you’ll find on other cards in the category and how it impacts a card’s overall rewards value. Cards with an annual fee will always be at a slight disadvantage in our scoring system since annual fees inherently cut into your rewards value, but if a card offers terrific value via its ongoing rewards and perks, it can earn a high score even if it carries a high annual fee.

With this in mind, we rate a card based primarily on how its ongoing rewards value and ongoing perk value (such as annual credits or bonuses) stack up against other cards in the category when you subtract its annual fee.

We rate each card’s flexibility based on the restrictions it imposes on earning and redeeming rewards and factor this rating into a card’s overall score.

Flexibility factors include whether a card only allows you to earn a high rewards rate on a small amount of spending or requires you to meet a certain earning threshold before you can redeem rewards. We also examine whether your points are worth less when you redeem for some options versus others and whether a card gives you the flexibility to transfer rewards to airline and hotel partners.

We also score each card’s set of features – its perks and benefits — against five tiers of features to provide a rating. We break down these tiers as follows:

• Tier 1 has less-than-standard card features (an ultra-streamlined card that offers basic utility and next to nothing in the way of ancillary benefits.
• Tier 2 includes the benefits you’d expect on standard Visa or Mastercard credit cards, such as free access to your credit score, car rental insurance and $0 liability for fraudulent charges.
• Tier 3 includes “prime card” or better-than-average card features like cellphone insurance, lost luggage insurance, concierge services and purchase protection.
• Tier 4 includes luxury features such as airport lounge access, elite status with an airline or hotel and credits for expedited security screening membership programs.
• Tier 5 includes the sort of exemplary benefits you’ll find on top-tier luxury cards, such as high-value travel credits, cardholder memberships and other unique and valuable perks.