In order to provide my household with more options when it comes to utilizing Discover’s balance transfer offers using their promotional checks, my gracious wife opened a new Discover It credit card this month at my behest using my referral link which got each of us a $50 statement credit.
The best thing about a newly opened Discover credit card is that all your cash back is doubled during your first year. Since the Discover credit card offers 1% cash back on every purchase and 5% cash back every quarter in certain categories, you can essentially earn 10% cash back on the quarterly categories and 2% cash back on everything else. In my opinion, this makes the Discover It credit card thee best rewards credit card for straight cash back, but only for the first year.
This quarter, from January 1st through March 31, 2021, Discover is offering 5% cash back for purchases made at grocery stores, Walgreens and CVS, on up to $1,500 in purchases:
Since it wouldn’t make much financial sense for me to buy $1,500 worth of groceries and pharmacy products between now and the end of the month, I did something else. I bought about $500 in gift cards to ALDI and Jewel and purchased about $1,000 worth of gift cards at Walgreens for retailers and restaurants that I either frequently purchase from or know I will soon need to purchase from.
After Discover doubles my cash back at the end of the first year, I will have received 10% cash back on qualifying purchases totaling $1,500 this quarter, or $150. If I’m somehow able to max out the remaining bonus categories the first year, that would be $600 cash back. Yes, that would mean I need to spend $6,000 in the bonus categories to make that $600 but if this was money I was eventually going to need to spend, then I’m making $600 in my book.1
I think earning 10% cash back, up to their stated limits, in various categories like groceries, gas stations, restaurants and a bunch of other retailers throughout the year is an awesome deal, so I just wanted to share my gift card buying strategy with readers so that you’re aware you don’t necessarily need to spend $1,500 on gas next quarter if you don’t really drive and want to maximize your cash back. You can just buy gift cards at gas stations that will effectively give you 10% off those particular retailers. Pre-paying expenses and dealing with the hassle of carrying around the gift cards when needed may not make sense for everyone, but for me, as long as I only purchase things I know I’m going to need to buy, then it’s just making money when you need to spend money. Making money to the tune of over $14,000 in the last 9 years through credit cards rewards:
- As I have mentioned before, using your credit card to earn cash back is only beneficial when you payoff your statement balance in full every month in order to avoid paying interest charges. If you carry a balance on your credit card in which you’re paying interest, you need to eliminate carrying credit card debt before you attempt any of this stuff.
