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June 20, 2005
Discover the Card that keeps on giving
Discover Card isn't accepted by some merchants and even though they were one of the first companies to heavily promote the idea of cash back credit cards, the amount they pay in cash back is no longer near the top of the list - their tiered structure means you don't start earning 1% cash back until you've spent $3,000 in a year, whereas it's not hard to find half a dozen cards that pay 1% cash back on the first dollar spent. Still, I use Discover more than any other card because of one of the sweetest features in all of credit card land: free cash advances that earn cash back.
When you go to certain grocery stores, like Safeway or Ralph's or Nob Hill in California, you can add $30 or $50 to your bill at checkout and it is treated like a purchase. That means you will get charged no transaction fees. So if you buy $50 in groceries and get $50 cash back, once you've reached the $3,000 in spending plateau, you'll earn $1 on that purchase (1% x $100 = $1). Of course, you don't want to carry a balance - then you're just borrowing more money at some obscene rate, but as long as you pay your balance in full every month, it's an easy way to earn a few bucks every month.
Then you can turn around and put that $50 cash in the bank (or sometimes it ends up in my girlfriend's pocket, if I'm not looking) and earn a little interest until you have to pay the bill.
Since we go to Blockbuster (I can't believe I just admitted that), we turn our $20 in cash back into 10 movie rentals using the "Cashback Bonus Award Partners". It adds up really fast if you get $50 each time at the grocery store. When my girlfriend and I shop together, we split up the food and both get $50 on the same card, so we earn $1 just on the $100 in cash we borrow from Discover.
I don't know all the stores that offer this feature, but Food Lion, Jewel, and Dominick's do. Vons and Pavilions used to, but I haven't been to those stores in a while.
I've made purchases for as little as $0.75 (pack of gum) and added on the $50 to "earn" the $0.50. I don't know how many times you can do this in a given period before Discover has a problem with it, but I know it's more than 22 times in 30 days and more than 4 times in one day (personal records).
Another nice thing about Discover is their willingness to give you free money to use the account. I have two cards, and use one exclusively for about a year, then call up and ask for balance transfer offers on the one I haven't used. The last two times I've done this I got deals: first, a 9 month, 0% APR balance transfer offer with no fees. Then two months ago, they gave me $1 every time I used the card over the next two months, up to a maximum of $25.
Finally, they offer 5% cash back on certain types of merchants throughout the year. For the summer, they're giving 5% cash back on gasoline purchases.
I'd be curious to know what else people have managed to earn from Discover and who else does this grocery trick.
Posted by brian at June 20, 2005 08:48 PM
Comments
I didn't use the grocery trick. However, they offer me $30 cash back rewards to keep me as customers even I only used 3 or 4 times in 6 months. Then I started to use a little bit more when they offer these special rewards every few months.
Then they gave me $20 on my account (not on rewards account) to appreciate me as a loyal customer. WOW~ That's nice even I only used few times.
The latest one is they offer me $15 on my rewards to sign up their account guard even I have no balance on this card.
So besides the regular cash back, I got $30+$15 on rewards account and $20 cash from them. I can't complain anything here....
Posted by: annabel at June 21, 2005 08:12 AM