Discover Card Cashback Bonuses

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Cashback Bonus
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In the past, Discover Card would allow its customers to redeem the full amount of their cashback bonus. Now, I've learned that I can only redeem in $50 increments. It didn't make sense until I realized that Discover can collect interest on the amount of money that they claim is part of their cashback bonus program. This means that if you have $195 in cashback bonuses, you can only redeem $150 and discover can collect interest on the remaining $45 until you redeem again. Multiply this by all of the Discover customers and this amounts to a huge profit for Discover card. There is no end to Discover's ability to accrue interest unless you happen to have a cashback bonus that is in $50 increments and you decide to cash it in.

Does anyone else have thoughts on this?
     
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Sparticus on 04/28/2011:
Interesting. I never thought about it that way. It used to be $20 increments (I think). But they could also be trying to cut down on administrative costs as well. I know they offer a number of gift certificates and coupons you can redeem. Perhaps they want to limit the number of requests they get for handling those?

Not sure why they would increase it from $20 to $50 though. That does leave quite a bit of cash on the table as you said for interest.
macdave on 04/28/2011:
I just redeemed mine this week and it was in $20.00 increments. I am not sure why you are complaining about the accrued interest on the remainder, if your willing to give them it until you get 150.00. Why don't you just redeem them when you get to 50.00?
Slimjim on 04/28/2011:
Honestly, I don't think this is done as a way to collect interest. First, they are the bank, so they don't pay themselves interest. Second, if you were to take that $45 they are holding, and put it in an interest bearing account yourself, you would end up with 22.5 cents a year interest at .5% APR, which is even high for a savings account these days. That's about 1.9 cents per month.
I think more realistically, it is a convenience thing for them. My BOA would only redeem out RC credits in blocks of 5000 points. Points aren't even money to them, yet they adopt the same similar policy.
trmn8r on 04/28/2011:
I have a couple of thoughts.

First, every rewards program I have participated in does the $50 increment thing, except LL Bean, which was in $10 increments. The practice never bothered me for the simple reason they are giving me the money in the first place. It is *their* program. It isn't like they are taking my money. I don't have to report what they give me on my income tax.

Second, let's assume that worst case every month you earned $95 and were given $50 back, and that this happened for a year. Let's assume you were able to get 1% annual interest, and that they have $45 of "your" money for a year. That's 45 cents TOTAL they recouped for giving you a total of $600 (50*12).

In this near-worst case scenario they get back .45 for giving me $600. That is a point oh seven five percent "penalty". That's why I don't complain about it.

unhappy999 on 04/28/2011:
I agree with the other comments. This is something they are giving you, they don't have to do it. The last time I got this through Discover Card it was in $20 increments. They probably changed it to cut down on their cost and postage. I don't get much in the way of cashback from Discover anymore, unless you are buying in one of the Bonus Categories for 5% cashback, the cashback from other purchases is less than 1% and takes a long time to add up. I can get better rewards from my Chase Freedom card which always is at least 1% and on bonus things 5%. They pay in $50 increments as well.
trmn8r on 04/28/2011:
unhappy999 -> I believe you are right and this was the motivation behind the policy in the first place - that they didn't want to waste money on postage. If they sent a check for every $10 instead of $50, that is 5 times the postage and paper. In the OP's words, across all customers that adds up to a lot of money - and it is more than the amount of interest they would earn as I showed above.
Yourwelcome on 06/14/2012:
Actually there is no interest calculated on the cash back bonus....it's a reward so your not charged for it..and if you redeem and there is a leftover amount you still get to keep the rest until you build it up more. Your not losing anything. Aside from that it is a REWARD, not a requirement.
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Consumers Be Aware Discover Card Bogus 5% Cash Back Scam
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RIVERWOODS, ILLINOIS -- Discover Card users, please do not believe in your Discover Card 5% cash back reward program. I just called customer relations to check on my cash back rebates on all the charges I booked through that card and just found out that they don't consider a lot of charges that should deserve 5% cash back. For example, hotels booked through travel agency sites such as Priceline, Expedia, Travelocity are not eligible for 5% cash back, hotel must be directly booked through the hotels themselves in order to be considered for 5% cash back. They do not consider Target, Sears etc as department stores, they consider them as discount stores and are therefore not eligible for 5% cash back even though any normal person would consider them as department stores.

Any smart shoppers out there, please do not get lured into applying for Discover Card by thinking that you can get all these bogus 5% cash back they advertise. Worst of all, they don't even disclose all these restriction upfront in a small print somewhere until you make all your purchases through their card and start wondering how come your cash back reward is still so small.
     
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unsmoothmoments on 07/28/2010:
the cash back bonus in determined by a code the merchant sends in.....I.e...walmart is .25% for a warehouse discount store. Although you can get everything under the sun at walmart they still send in a code labeling them a warehouse, not a grocery store and therefore no 5%.
a hotel is a hotel...experdia is a travel agency.
PepperElf on 07/28/2010:
as with any credit card or rebate program.... one should read the fine print first
smarty_consumer on 08/21/2010:
The main feature of the card is to get cash when you don't want to use or have your own to buy stuff you may or may not need. Using it just to get a rebate makes no sense. If you don't like it, get a card with someone else that has a better deal. This is incredibly easy to fix. Cancel the card and go elsewhere.
Dora on 01/11/2012:
Target is not a department store. A good rule of thumb is that a department store has separate departments and a cash register in each department... I.e Macy's and JC Penney
DP on 12/12/2013:
I have had many occasions where I don't see 5% cash back for transactions. I have to agree, Discover card cannot be trusted. Once I pay off my outstanding bill, I will refrain from using this card.
debtroundup on 01/10/2014:
Discover along with most rewards cards uses the merchant code. It all depends on the merchant. You get the same thing with most, if not all, rewards cards that do categories.
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Fraud Prevention And Cash Back Bonus
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UPLAND, CALIFORNIA -- I had been a member since 1994. I have always paid my bill off in full and have never missed a payment nor had I ever been late. There was one fraudulent charge of about $400 which was clearly not by me. Discover knew it was not me,but would not cover my charges because I did not want to have to go to the police station to file a report. They made me fell more like the criminal than the victim. They continued to question me and pressure me. Then when I closed my account they would not let me cash out or use my $127 dollars that I had in my cash back bonus award.

I used to be very happy with Discover and recommend it to other people. Now I am very disappointed and would not recommend or use Discover again.
     
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BobJohn on 10/03/2008:
The obvious question is, why didn't you want to file a police report?
madconsumer on 10/03/2008:
"but would not cover my charges because I did not want to have to go to the police station to file a report."

if you knew it was fraud, why did not you do everything required to prove it? from a 3rd party point of view, knowing this, I too would say it was your charge and you are trying to get away without paying for it.

if I had a fraudulent charge, I would do everything possible to re-coop the charges.

I think the wife found the charges, and now the hubby is trying to cover up his sex filled weekend with a local lady of the evening. or a shopping spree at the local porn shop.
Principissa on 10/03/2008:
Why didn't you want to file a police report. You know it's fraud, they know it's fraud, and all they need is a silly piece of paper to help you. Seriously this is not Discover's fault, it's yours for being lazy.
Suusan B. on 10/03/2008:
You were told by Discover to file a police report - - you made the choice not to do so and therefore must live with the consequences.
Starlord on 10/03/2008:
My cop sense is tingling. Why would you not want to make a police report, unless you were afraid of contact with the police for some reason?
Slimjim on 10/03/2008:
It sounds like a police report was a mandatory step in processing a fraud charge-back. Possibly to protect merchants from fabricated reports and/or have law enforcement at least in theory investigating. It seemed like a fair request and pretty simple undertaking to clear that $400 off the card.
Ben There on 10/03/2008:
"Hey Lois, Diamond Jim Brady over here just asked if we accept Discover Card!"

"Ooooh, they're in an exclusive club called 'anybody!'"
annonymous1987 on 07/21/2009:
When someone refuses to make a police report, its because they are either lying, or do not want to get caught doing something wrong.

You are given a period of time in which to make a report, if one is not done, you void out your fraud report and agree to take responsibility.
PepperElf on 07/21/2009:
Yeah... as far as Discover cares, if you don't file the report it means you made the purchase.

Therefore you are liable for the charges no matter what you post at sites like this.
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Discover Card Will Keep Your CashBack Reward if You Close Account
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SALT LAKE CITY, UTAH -- Discover Card will forfeit your CashBack reward if you close your account prior to redemption. I closed my account on March 24, 2006 and faxed Discover Card a letter to confirm my account closure. I further directed Discover Card to apply my CashBack award to my outstanding balance. I received a letter from Discover Card on April 1, 2006 and the letter stated "that I forfeit my CashBack award when I close the account..... This is clearly stated in the cardholder agreement".

I respond back to Discover Card, via written faxed letter, and demand they apply my CashBack award to my account balance because the money is mine and I have earned it. I directed Discover Card to take the following steps and I stated in my letter to Discover "I could not understand why they did not do these steps in the first place". I directed Discover Card to:

1) Re-open my account.
2) Apply the CashBack reward, as the account is now "open".
3) Re-close the account.

I received a check from Discover Card CashBack rewards for $180.00 in the mail yesterday even though Discover Card previously told me I was not entitled to the reward and had forfeited the amount when I closed my account. Do not let Discover Card steal from you and rip you off with their "Cardholder Agreement" forfeiture BS because the reward is yours and you are entitled to it. Persistence paid and I caught Discover Card in their rip off tricks. I thought one-step ahead of them so "it pays to Discover", persist and be informed.

My advice to anyone who is wishing to no longer do business with Discover Card and close your account, redeem your CashBack reward before you close the account. You can go online to Discover's website and redeem your CashBack reward. If you close the account and then want to claim your reward, then do what I did, as mentioned above, and do not allow Discover to mislead you into forfeiting the reward and lining their golden pockets.

After all, per their Cardholder Agreement, they can change and/or amend the account terms at anytime so use this in your favor and throw this clause back in their face. Discover likes to remind the cardholders of this clause all the time so they can exploit their cardholders. Make Discover Card “change the account terms” in your favor and send you a check for your reward even though the account is closed and you “allegedly” forfeited the reward by closing the account.
     
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viperpa33s on 04/18/2006:
Thanks for the tip, I will let other people I know who have cards with cashback.
Discoverhater on 04/19/2006:
JayD Are you employed by Discover Card, as you quickly defend them. What you are saying is that if you have earned something of value but cease doing business with the company then you loose what you have earned. Based on your post, I should therefore not be entitled to earned wages if I terminate my employment this coming Friday with my current employer nor should I be entitled to be compensated for unused vacation time I have earned because I am terminating employment. Let my company try to enforce this clause against me, if I terminate, and not pay me for this week of work and any unused vacation time. They may try to reference a “forfeiture clause” in the employee handbook but will back down once I challenge them as to the legality of it.

Why does the cardholder agreement state this, maybe because they want to steal your money and punish you for not carrying their card and hope you do not challenge them. I challenged them and did not give them a defense because I caught them in their tricks. I told them to re-open the account and apply the Reward, which most people probably would not do or think to do. If Discover Card retained my CashBack reward, they would be in breach of contract and their “account closed” argument would not hold in court. I contacted a friend of mine who is a corporate attorney and confirmed this prior to sending Discover Card the letter and doing my post.

The terms of the offer are as follows:
Discover Card offers you CashBack Rewards as consideration for using their card. You use their card for purchases and earn the reward, as clearly stated in the terms and conditions, and the balance accumulates. The reward is now yours because you have fulfilled the terms of their offer by making the necessary purchase(s). You now terminate your relationship with Discover Card. The reward is still due to you and you are entitled to it. Therefore, I did earn the reward money by utilizing the card and making purchases with it and Discover was not “nice enough” to give it back to me but rather they could not defend nor did they have a defense to my letter because they know I am right and they could not challenge me.

Most consumers do not challenge the card companies just as they do not challenge the car salesperson when they buy a new car so they end up paying and the dealership makes a heap of “stupid money” from them. I stand up and do not let companies screw me with the “contract verbiage” that is mainly written to be used as a defense to present to the consumer if they challenge it. Have you ever tried to challenge some of these “junk clauses” in court or had an attorney challenge them for you? Chances are that 99.9% of the time, the companies will give you what you want or they will settle out of court and want you to sign a confidentiality agreement. “Junk clauses” are in all types of contracts and are there so companies can prey on consumer’s ignorance but will not be enforceable by court action. A good example is when you buy a home and have to sign the contract for title insurance and a title search. The title companies insert a “garbage clause”, as attorneys call them, at the end of the contract. The clause states the title company has performed a thorough search of the house title and finds no defects and they have done their work so if any title problems arise after the fact then they are not liable nor does the homeowner have any recourse against the title company. My attorney had this contract clause striked and made unenforceable so the title company could not use as a defense in the event I encounter a title defect in the future. After all, this is why you buy and pay for title insurance so the title company needs to take responsibility for their negligence.

Finally, I will in no way, shape or form say that “Discover Card is ok” because they are not. They are loan sharks just like the rest of the credit card industry. David Nelms has migrated MBNA’s tactics over to this company and now Discover engages in the same tactics that MBNA engages and engaged in. Consumers caught onto MBNA’s tactics and MBNA experienced mass attrition rates, they fell short of earnings projections last year and their stock price fell and they became an undervalued company so Bank of America swallowed them up in 2005.
Anonymous on 04/19/2006:
Discoverhater you rock!
rockay on 07/07/2007:
just because you are illiterate an cannot read and understand something as simple as a cardholder agreement that CLEARLY not "allegedly" states that you will forfeit you cashback bounus doesn't mean you should blame discover for doing exactly what they said would happened when you close your account... duh!
CreditCardAdvice on 05/03/2008:
I'm with rockay on this one plus when you close an credit card of course you lose your rewards DUH!!!!!
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Unethical Cashback bonus terms obfuscation
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Discover touts its Cashback bonus as an "up to 1%" reward on all purchases, They conceal or obfuscate the terms of this program. The 1% terms do not begin until you have over $3000 in purchases for the year. Each anniversary you start at a tier level earning 1/4% on the first $1500 of purchases and 1/2% on the next $1500. The statements sent by the company do not clearly reflect the cashback compensation, but you must try to figure out their math yourself.

My problem is that no where on the Discover website can you find this information. From their wording or juxtaposition of words, they give the impression you get 1% on all purchases and their literature indicated you can get 2% cashback (by redeeming your money for selected gift certificates). I got this information from a third party source on the internet rating credit cards.

I just consider it unethical to hide the real terms of this program so that a consumer has to dig to get accurate information on their product. Having found out these hidden terms, I'll be less likely to use this card than if they were clear and upfront about their program. Caveat emptor.
     
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rockay on 07/07/2007:
Read. that is the only advise I can give to someone who is confused with this abstract cashback bounus phenomenon. EVERYWHERE on the website, cardholder agreement, and terms of conditions does discover say UP TO 1% cashback on all your purchases. never does it mention anywhere just a full 1%. I challenge you to find one place that does not say 1% cash back bounus without the words "up to" in front of it . discover is not misleading they are simply telling the card holder that you earn what...? UP TO! 1% and fyi discover gives away more cashback bounus then any other credit card company out there and that is fact and discover has held that title for the past 5 years so obviously the up to 1% cash back is working for everyone else but you.
discovercardgotohell on 08/14/2007:
discover is the worst credit card in the world! let everybody in the world know this! God will punish them!
CreditCardAdvice on 05/03/2008:
Yup everywhere you look online,print, even talking to a rep it says / they say up to 1% back
MandyCakes on 05/30/2009:
I hate people who complain about free money you're getting to use your card!
GO use cash or debit and get nothing! Seriously how greedy to people get?
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Cashback Bonus Discover Card
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HENDERSON, NEVADA -- On October 7, 2007 I accepted an offer for a $25.00 dollar gift card to RED LOBSTER restaurants for $20.00 out of my cash back bonus on my Discover Card. Sounds like a good deal, right? Well it is now April 28, 2008 and I have not yet received said gift card and they will not put my $20.00 back into my bonus plan. Can you say RIPOFF!

If anyone gets a call with such an offer just tell them to give you the CASH!!
     
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Slimjim on 04/29/2008:
I've always taken the cash but that does sound like a good deal and we have a Red Lobster close. I may have taken a like offer until I read this. Thanks
CreditCardAdvice on 05/01/2008:
Hello there I work for Discover Card and just so you know Red Lobster changed there contract agreement with Discover back in October 2007 to get rid of the 20 dollar gift card and only have the 40.00 Discover did send out notices to there customers about this I think when you redeemed the computer system allowed automatically because it might have not been updated in the system and that screwed everything up for you. All you need to do is call 1-800-Discover (1-800-347-2683) and talk to customer service and explain to them your situation and ask for a supervisor to get your 20.00 back and they can deposit it back into your checkings or savings account or credit it back to your discover balance or you can choose another gift card.
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