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For college students, there just aren't many credit card options that will treat you like an adult. While the best credit cards tend to be rewards-focused most cards catered to students have poor if any rewards at all. Fortunately, the Discover it® Student Cash Back is one of the few cards that offers students the same benefits as holders of the standard Discover it® Cash Back card. The Discover it® Student Cash Back offers a competitive 5% cash back on rotating categories when you sign up (capped at $1,500 in spending each quarter) which, if used even somewhat frequently, will provide fantastic rewards to any student trying to stretch their dollar further. Plus, at the end of your first cardmember year, Discover will double all the cash back you've earned (offer only available to new cardmembers). This is one of the best benefits we've seen on any cash back card, since it will effectively make your cash back rate 2% to 10% for those first 12 months, up to the quarterly limits.
- $0 Annual Fee
- Rewards are as good as some top-tier credit cards' perks
- $20 statement credit each school year your GPA is 3.0 or higher for up to the next 5 years
- Some rotating categories might not be useful for students
- Discover cards are not as widely accepted at all places
Review: A Great Option For Students Looking To Build Credit
For students looking to build their credit, few cards provide an option as good as the Discover it® Student Cash Back. Among all student credit cards, the Discover it® Student Cash Back provides one of the higher cash back rewards. Not only that, but it is designed with a newcomer to credit cards in mind. The Discover it® Student Cash Back has built-in safety mechanisms that can protect you from common mistakes that first-time cardholders might make on their first credit card.
One feature that we like about the Discover it® Student Cash Back is the "No Penalty Rate", which is a pretty big deal when it comes to downside risks. Even if students fail to make monthly payments on time, they won't risk having their credit card's interest rates raised to a high level. Keep in mind though that you still risk getting a knock on your credit score at the very beginning of building credit history, so you're still fully incentivized to make your payments on time.
Furthermore, the Discover it® Student Cash Back also rewards its cardholders with different bonus categories every three months that undergraduates can earn up to 5% cash back on, when they are activated. These range from gas stations, restaurants, to grocery stores. The bonus categories are capped at the first $1,500 in spending each quarter.
For new cardmembers, all the rewards you earn are doubled at the end of the first year. This same perk exists on other cash back Discover it® credit cards, and it's what makes these cards stand out beyond it's competitors. In the very least, this benefit helps make up for the fact that the Discover it® Student Cash Back has no welcome bonus.
If you're a student with a GPA of 3.0 or higher, Discover will provide you with even better rewards. New members who meet the aforementioned qualification, will be awarded a $20 statement credit each school year for up to 5 years. This benefit is, of course, reliant upon you being in school. Therefore, we anticipate most individuals will only be able to take advantage of it for approximately 4 years. Still, that is a decent $80 rewards for those who manage to maintain that 3.0 GPA over that time.
Discover it® Student Cash Back Benefits and Features
To help you understand the Discover it® Student Cash Back we took an in depth break down of the cards features and explain what we think about each.
The Rotating Bonus Categories from Discover it® Student Cash Back
Each quarter the types of stores and spending where you are eligible for bonus cash back change. Stores which fall into the right category, during the right time of year will earn you up to 5% cash back on your purchases. Note that this is capped at a maximum quarterly limit of $1,500 – this translates to a maximum cash back rewards of $75 ($1,500 x 0.05 = 75). All other spending nets students with the Discover it® Student Cash Back 1% back, with no cap.
For maximum savings, be sure to be aware of when you can save most on your big purchases – especially those you can put off by a few months in order to receive a greater bonus. Below is the 2018 calendar that can give you an idea of the types of categories involved.
Jan - Mar 2018
|Apr - Jun 2018||Jul - Sep 2018||Oct - Dec 2018|
Gas Stations & Wholesale Clubs
|Grocery Stores||Restaurants||Amazon.com & Wholesale Clubs|
How Do I Maximize my Cash Back on the Discover it® Student Cash Back?
While it is not always possible to make 100% of your spending fall into a bonus category, we wanted to present you with an idea of what to expect if even a portion of it does. To do so, we considered an individual with a hypothetical budget of $1,000 – the sum here really doesn’t matter, the rewards rates will apply to your total spending as well. What does matter is what percentage of your total spending will be located in what category: bonus or general?
What we did was take increments of $250, in order to paint a clearer picture of where an individual could fall. For example, say you spend $250 on bonus categories, earning 5% cash back, while the other $750, earns you 1% cash back. Therefore, your total cash back becomes:
- Bonus Categories: $250 x 0.05 = $12.50
- Other Spending: $750 x 0.01 = $7.50
- Total Rewards: $12.50 + $7.50 = $20
- Rewards Rate: $20 Total Rewards / $1,000 (which was what you spend in total) = 2%
Therefore, by making just 25% of your total charges fall into the bonus rotating category each quarter, you can have an effective rewards rate of 2%. Below is a table showing you different percentages of spending and what the resultant effective rewards rate will be. The table below shows approximate rewards rates depending on estimated spending in the bonus categories.
Spending in Bonus Categories
|Effective Rewards Rate|
Redeeming Cash Back
An additional feature of the Discover it® Student Cash Back, which is not present in many other cash back credit cards, is the ability to use the cash earned at any point. Discover it® Student Cash Back users can choose to, at any point, use their balance to shop at the online retailer Amazon. There is no loss if you choose to redeem your rewards in this way. $1 earned through Discover it® Student Cash Back cash back equals $1 you can spend directly on amazon.
Credit-Building Tools on the Discover it® Student Cash Back
As we mentioned, one of the best features of the Discover it® Student Cash Back is the fact that it has no penalty APR. Under most credit cards, if you're late on a payment for more than 30 days, the card company can raise your interest rate to the Penalty Rate or Default Interest Rate. This is a pretty big deal since that rate is usually close to the maximum allowable by law. (To see what penalty rates are like by issuer see our credit card interest rate article here) Generally speaking, this can be anywhere from 10-15% higher than your original APR and the rate can apply indefinitely. It means your balance can become almost twice as expensive.
It is understandable that studying for finals or stressing over research term papers can result in the occasional late or missed credit card payment. With the Discover it® Student Cash Back, even if you do fail to make your payment on time, you won't risk getting penalized by Discover with high interest rates on financing charges. Keep in mind though that, while there is no immediate penalty, credit card users still adversely impact their credit score, so there is still a premium on making timely payments.
One last noteworthy aspect of the Discover it® Student Cash Back is its credit score reporting. With this card, students have the ability to constantly monitor their credit score. Each month their FICO score is presented to them on their statement – if you want to know your current score sooner, Discover also provides this number online. This option gives students insight into how their spending and payment habits affect their credit score – a lesson they can take with them to other credit cards down the line.
How does the Discover it® Student Cash Back compare to Other Credit Cards?
To help you make a better comparison use our tool to compare the Discover it® Student Cash Back with the other student credit card options. Our interactive graphing tool below allows students to enter in their estimated monthly spending across different types of categories to see how their rewards rate can compare across several credit card options they might be considering. In addition to their rewards, users can also see other metrics such as interest rates, and annual fees, etc.
Discover it® Student Cash Back vs Discover it® Student chrome
The most difficult choice for some may come when having to decide between the Discover it® Student Cash Back or its chrome variant. The Discover it® Student chrome card works a little differently than its sibling card. The chrome version has no rotating categories. Instead, cardholders receive 1% cash back for all purchases except for those made at gas stations and restaurants – there, students can receive 2% (up to $1,000 per quarter). The bonus category on the Discover it® Student chrome is at least more tailored towards student spending than some of the Discover’s rotating categories. This certainly adds to the card’s functionality.
Because of the different rewards structure, choosing between the cards should come down to the following consideration. If one’s spending is far more limited in both scope and amount, the Discover it® Student chrome provides better value. However, if you enjoy spending freedom and often shop around for things included in the standard edition’s rotating categories, the Discover it® Student Cash Back is a far better card.
Both cards offer the same "double your rewards at the end of the first year" perk.
Discover it® Student Cash Back vs Chase Freedom®
The Chase Freedom® is a card which works in a similar way to the Discover it® Student Cash Back. There are rotating categories, which give 5% cash back on certain purchases during certain times of the year – exactly like the Discover it® Student Cash Back. To earn the 5% cash back on up to $1,500 in combined purchases you have to activate the bonus categories each quarter. The one thing the Chase Freedom® has over the Discover it® Student Cash Back is the sign-up bonus. The Chase Freedom® cardholders are given the chance to earn $150 if they spend $500 within 3 months of receiving their card.
Discover it® Student Cash Back vs Citi® Double Cash Card
The Citi® Double Cash Card is one of the best cash back cards around. As mentioned previously, the Discover it® Student Cash Back falls into the ‘rotating category’ type of cash back credit cards. The Citi® Double Cash Card is one of the best cards which fall into the opposite camp – flat rate cash back. No matter when or how you use your Citi® Double Cash Card, you will earn 1% back on your purchases, and another 1% when you pay for those purchases.
For a consumer who is not concerned about working to maximize the value of their card, by making purchases at optimal times and for optimal categories, the Discover it® Student Cash Back can have more value. However, if you simply want a no-hassle card which provides great rewards, then the Citi® Double Cash Card is a no brainer.
Discover it® Student Cash Back vs Blue Cash Everyday® Card from American Express
The Blue Cash Everyday® Card from American Express follows the same flat rate with no annual fee structure of the Citi® Double Cash Card. Users earn 3% cash back at US supermarkets (capped at $6,000 per year), 2% back at U.S. gas stations, and 1% back everywhere else. This structure is more difficult to manage than something like the Citi® Double Cash Card, however it is still simpler to keep track of than Discover it® Student Cash Back changing categories. Students should look to the their spending patterns, and which merchants they frequent to guide their decision between the two cards.
For rates and fees of the Blue Cash Everyday® Card from American Express, please click here.
Bottom Line: Is the Discover it® Student Cash Back Worth It?
Students looking for their first credit card have a lot to gain by applying for the Discover it® Student Cash Back. This card requires a certain level of involvement and monitoring in order to maximize its value. If consumers are looking for less hassle and a flat rewards, at the cost of losing a few bonus categories, the Discover it® Student chrome may be a better option. Ultimately, the Discover it® Student Cash Back is a fantastic card for building credit, regardless of which variant you choose to go with.
Resources for Discover it® Student Cash Back
How do I use my cash back at Amazon.com?
To see how to use Discover it® Student Cash Back cash back credit on Amazon, follow this link: https://www.amazon.com/gp/shopwithpoints/marketing.html?ie=UTF8&inc=cbbusage&pr=swpdfscbb.
How do I apply for the Discover it® Student Cash Back?
To apply, visit Discover's website.
How do I check my FICO score, if I am already a Discover it® Student Cash Back cardmember?
You can check your credit score at any point by logging into your Discover online account, through card member services. You can also see your most recent credit score printed on your monthly statement.