Discover Downgrades 5% Cashback Rewards

Discover recently downgraded its 5% cashback rewards. Used to be you got 5% cash back up to $1200 annually. Now, you only get 5% on the first $100 each month. Don’t charge up to $100 that month? You’ve just missed an opportunity to save $5.

Reader Matt is thinking about canceling his Discover now. He and his wife have Discover Gas & Auto cards. He writes, “Now, if I pay $200 for auto repairs, only $100 will be at 5%, and $100 will be at 1%, plus, I have to wait until the next month before I can start earning my 5% again. Very frustrating. Maybe if enough people call Discover and complain: 1-800-DISCOVER (1-800-347-2683) they will change this back to the way it was.”

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  1. scoobydoo says:

    I guess Discover thinks they are now mainstream enough to do this. I’m guessing their generous 5% back was just to generate some marketshare.

    Like all CC companies the time has come to tell their customers just how much they hate them.

  2. Crumbles says:

    Hey, they posted my article! :)

  3. Crumbles says:

    @Crumbles: Also, I encourge everyone to call and tell them they will probably cancel in October. Maybe if enough people call to cancel, they will reconsider this. Keep in mind if you miss spending $100 a month, you lose your opporitunity to EVER make all of your $1200 from the 5% now since they are going to cap it.

  4. Starfury says:

    This kind of “reward” program is why my Discover card sits unused at home. It used to be my primary card until I got my Amazon card.

  5. Mary says:

    Discover was the first company to offer me a card so I could build a credit history, but their “rewards” have always been mostly useless. This guarantees that I’ll never use mine again, and probably will cancel it.

    But then, I’ve been planning to cancel as soon as my credit rating came back up and my husband got a new card to make up for the “unused credit” that it was giving me. They said some pretty heinous things to my sister when she was out of a job and trying desperatly to pay her bills, this is just icing on the cake.

  6. synergy says:

    what the F?! This is the first I hear of this. I’ve been using Discover to make some cash on all my purchases. I guess they didn’t appreciate that me and probably a bunch of other people were paying our bills in full. Thanks for the tip. I’ll stop using them unless for some unknown reason I need money in a pinch.

  7. synergy says:

    Oh wait. That’s on gas and maintenance. Oh well. I only fill up my car with maybe at most $60 a month.

    Ben: You should clarify the entry to state that this refers to “G&A Purchases.”

  8. Why do you suggest that people complain and maybe they’ll change it back? Logic seems to indicate that they wouldn’t have changed it to begin with if they didn’t think they needed to recoup the money. Just tell the people reading your blog to do what every smart consumer should do when a company tries to screw you … fire them.

    Vote with your wallet. Cancelling your account and taking it elsewhere is the only thing a company understands.

  9. CuriousO says:

    this has to be the shitiest card to have… the only reason i still have one is because it comes in handy when shopping @ Sam’s you cant get cash back from the register with no extra fees. if it wasnt for that i would od canceled long time ago.

  10. ancientsociety says:

    This seems to be only applicable to Gas & Auto cards. Please change the headline to reflect that.

    I really like Discover. Have always had good customer service, their website is use-friendly, and when I make large purchases or use it more frequently then I normally would Discover Fraud usually calls me just to make sure the charges are legit.

  11. Crumbles says:

    @synergy: It doesn’t only refer to their Gas and Auto. It applies to any 5% rewards program that Discover offers. I just happen to have my card set up as a Gas & Auto card. Auto includes paying for oil changes, car maintenance etc.

  12. joeblevins says:

    Also it said your Sam’s/Costco/BJ’s purchaces don’t count towards the bonus either. At least I think that is what it says below the highlighted portion.

  13. FijianTribe says:

    Lame, I have been with Discover for years due and even negotiated with them on getting a better rate since I have pretty good credit. I will still stay with them for a while longer, at most I would only recieve $20-40 back in a given year. So its not like I got much out of it anyways.

    A few things I think are pretty dumb though are the exlusions of warehouses and rounding down to the nearest cent…. I mean seriously, talk about being stingy. I’m sure to them it might mean hundreds of dollars saved, but just by doing that you make the customer feel like your just trying to rip them off… And on the warehouse issue, Costco (where I shop a lot) does not even accept Discover and Home Depot does, but they are probaby considered a warehouse.

  14. Max2068 says:

    This is why my discover lies unused at my apartment. At one point it was my main card, but it wasn’t until after I purchased a new computer on it that I was informed they downgrade your cash back after earning a certain dollar amount per year. Additionally frustrating is their requirement that cash back be redeemed in increments of $20.

    What should have been 1% back on a $4000 computer became 0.25%. I would have canceled the card long ago, but I have around $18 in cash back, and I can’t bring myself to cancel, knowing I have almost enough to get $20 back from them.

    Blah.

  15. hills says:

    I’m not psyched about this either, BUT I’ve been happy with Discover – used their 0% balance transfer to pay off my wedding without accruing much interest on new purchases (I just had to use my card once a month to keep my 0%, so I would send myself $1 a month via paypal) – I keep it around in case I need that deal again.

  16. synergy says:

    @Crumbles: I just logged into my account at Discover and see nothing in the Cashback section about this. However, I’ve sent them an email asking and we’ll see what they say.

  17. Yeah, this stinks, but it makes sense. I laughed when I signed up for thier most recent 5% CashBack on all Gas purchases that started in July: “HA! At $3.70/gallon they’re gonna go broke!” So, I guess this is Discover’s way of keeping from going broke.

  18. Crumbles says:

    @LastVigilante: Um… no. You could only get up to $1200 before at the 5% anyway. So, the price of gas doesn’t matter. It only allows you to get the $1200 faster with higher gas prices. However, you would still be capped at $1200 either way.

  19. krunk4ever says:

    Someone tells me this only affects the Gas & Auto cards and not the regular Discover Cashback Bonus cards.

  20. ungsunghero says:

    @Crumbles:

    As ancientsociety mentioned earlier, it sounds like this downgrade only applies to the Discover Open Road card (that gives back 5% cash back on G+A purchases) , and not the Discover More (formerly the Platinum) card, which gives four 5% cashback bonus offers (one per quarter).

    I’m guessing LastVigilante is talking about the 5% “Get More” Cashback Bonus offer, available on the Discover More card, that runs from July-September of this year (5% on up to $400 in purchases for gas and travel-related expenses).

  21. napalm381 says:

    max2068 is flat out wrong on how the rebate is calculated. Discover DOES NOT knock you down after a particular amount – it’s exactly the opposite! The following is directly from their website:

    “We calculate your Standard Cashback Bonus based on the following tier levels by multiplying your total Standard Purchases at the end of each billing period by:
    * .25% (.0025), if the purchase is part of your first $1,500 in total annual purchases,
    * .50% (.005), if the purchase is part of your second $1,500 in total annual purchases, and
    * 1% (.01), if the purchase is part of your total annual purchases in excess of $3,000
    * Purchases made at select warehouse clubs, discount stores, and their affiliates earn .25% “

    max2068 probably bought his computer at a time that coincided with the annual amount reset, or bought it from one of the 0.25% stores. I put large amounts on my card each month, and the rebate amounts work out to 1% or more.


    Additionally, I prefer the Discover rebate system to Amazon’s Visa. Amazon just sends me a card when I hit $25 in rebate. This $25 expires too, so the cards aren’t really stackable. Discover lets me accumulate rebates as high as I want, and there are merchants where I can stack the cards. Additionally, some merchants offer gift certs where they tack bonus dollars on. For example, Crutchfield will give you a 50 dollar gift cert for 40 bucks in rebate. AND you can stack gift certs there. I’ve got 320 bucks in rebate right now, which translates to $400 in gift certs. Seems like a deal to me.


    (as an aside, with the price of gas, is it really so hard to spend $100 bucks a month on gas and repairs these days?)

  22. XianZhuXuande says:

    This is specific to the Discover Open Roads Card. I actually got one of these cards specifically for this sort of purchase. I get unlimited 5% back on gas from two separate cards so that isn’t the issue — this card allowed me to get money back on tuneups and other similar maintenance issues. As soon as they introduce these changes it will be far less valuable for me (though I guess something akin to 3% back on a $200 purchase will still come in handy).

    Discover has never been good with card rewards. I’m not sure why — I’m pretty sure they charge greater merchant fees than Visa/Mastercard (but yet some Visa/Mastercards have much better rewards programs). A shame…

  23. @ungsunghero: Correct, I was referring to the standard Discover Card “Get More” programs… to which is now apparent that this article was NOT referring to.

    The “Get More” program already has a set limit (I’m trying to find it on the website now but to no avail) which I think is $1,000 for the promotion’s term, meaning the maximum 5% cash back one could receive is $50.

    Despite not having an Open Road card, I recieved the same notice in my last statement from Discover… so we can all just blame Discover for causing all this confusion by not explaining which terms apply to which accounts.

  24. Trackback says:

    Effective October 1, 2007 it seems that Discover will be changing the terms of the 5% Cashback Bonus program on the Discover Open Road card.