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Discover has been on a roll this year, which was recently confirmed by the J.D. Power and Associates survey that announced American Express and Discover tied for first place for top customer satisfaction honors. To me, that makes perfect sense since Discover has always been willing to offer bonuses to their customers for being a Discover card holder. Earlier this year they offered a temporary credit line increase to encourage customers to perform a balance transfer, and this past summer they offered a $150 cash back bonus.
If you carry a Discover Card, you may soon receive a special year-end holiday shopping bonus offer. The extra cashback bonus is being extended to “select Discover card members,” according to the invitation. You could also call Discover’s customer service at 1-800-DISCOVER to find out if you are eligible.
How it Works
The offer is pretty simple and straightforward. Basically you are invited to sign up between now and November 30, 2014 in order to qualify for an extra $200 cashback bonus. To earn the Discover it sign up bonus you must spend at least $1,500 a month on your Discover card between December 1, 2014, and April 30, 2015. Certain restrictions apply so always check your credit cards terms and conditions. For example, you cannot earn cashback on cash advances.
In practical terms, this bonus means that if you are not in the habit of spending over a grand each month on your card, the offer will probably not appeal to you. After all, to meet the minimum level of spending you’d have to charge at least $1,500 to the card in each of five consecutive calendar months. That adds up to total spending of $7,500 – just for the chance to earn $200 of those purchases back as your bonus.
Analyzing the Value of the Bonus
If you usually are a rather heavy Discover Card user accustomed to those spending levels then this would be a no-brainer -it’s low-hanging fruit and an easy way to pocket $200.
One way to do the math is to divide the bonus by the five months of spending required to arrive at a monthly figure. You would earn $40 cash back for each of those months, which is a pretty valuable reward for using the card.
A helpful way to crunch the numbers and do an easier comparison to your typical rate of earning cash back is to figure out exactly what percent you’re earning with the bonus. If you are receiving $200 for spending $7,500 – or if you earn $40 cash back for spending $1,500 in a month – that equals an approximate cashback rate of 2.7%. Compared to the average rate of 1% that’s offered by most cashback programs, that’s a really generous benefit.
Carrying a Balance Undermines Your Bonus
Just be careful to pay off your entire balance during the grace period, before you are charged any interest for carrying a balance from month to month. If you are charged an annual percentage rate (APR) of 15.99% for carrying a balance, then you are somewhere in the neighborhood of about 1.3% interest per month.
If you wind up having to pay that, it undermines your bonus considerably. A good way to wrap your mind around that is to think of a standard cashback program that rewards you with 1% back on every purchase. Compare that to the price you pay for carrying a balance and it is easy to see that you wind up losing money on that deal.
Can’t Meet the Spending Requirements?
Another obvious hurdle for many cardholders is the $1,500 a month minimum. If you aren’t a big spender, how can you accumulate that much in monthly purchases? Try using your card to do all your holiday shopping and traveling in December to help boost the spending to at least $1,500. Then, when January arrives, you can use it to pay for an annual gym membership, or take advantage of the post-holiday sales.
Another way to raise your spending level is to pay for recurring monthly expenses with your credit card. Think cell phone bill, Netflix bill, or purchases on Amazon, for example. The more you strategize, the more ways you’ll find how to put charges on your plastic that you might otherwise pay by cash, check or debit card. If you are spending the money anyway, why not earn cash back? Just be sure to pay your balance off before the statement close date.
Compound Your Cashback Earnings
There are other ways to beef up the normal cashback rewards during the bonus period, too, in order to earn as much as possible. For example, you can earn 5% for online shopping and department store purchases this quarter, which is just in time for Black Friday.
Perhaps a 5% cashback benefit is available for up to $1,000 worth of gas-related purchases through the promotional period that ends November 30th. Check your account and see what offers might be on the table that you can take advantage of each month or each quarter.
* Editorial Note: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are the author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.
*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.