How does Discover Cashback bonus work?
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Discover pays 1% cash back on all purchases, and 5% cash back on selected categories that change every 3 months. January’s 5% category will be grocery stores.
So let’s say January 1 rolls around and you spend $100 on clothes. You get a $1 credit on your account. If you spend $100 on groceries, you get a $5 credit on your account.
Any time you feel like it – next week, next month, next year – you can have that $1 or $5 deposited into your checking account or you can apply it as a credit toward your card balance. The 5% categories have a limit of $75 cash back ($1500 in purchases), at which time all additional purchases are at the standard 1%.
I do all my spending on a Discover card. Groceries, restaurants, electric bill, Hulu subscription, etc. This gets me about $1,000 cash back every year. Because I pay my bill in full every month, I never pay any interest or finance charges. Discover is literally paying me to use their card.
This is with the credit card. If you are talking about the checking account debit card, everything is 1% and there are no 5% categories.
If you use the Discover card for the right categories of expenses, then Discover credits you with bonuses. These bonuses accumulate and you can use them to offset expenses paid for with the Discover card. The categories tend to change every three months so that they can convince you to use the card for a variety of different kinds of expenses. It basically tries to increase your use of their card.
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