Discover Card Complaint - Cashback Bonus - Cashback Bonus On Purchases

Posted by Sparticus on 2011-04-28:

Interesting. I never thought about it that way. It use 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.

Posted by macdave on 2011-04-28:

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?

Posted by Slimjim on 2011-04-28:

Honestly, I don't think this is done as a way to collect interest. First and foremost, 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.

Posted by trmn8r on 2011-04-28:

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.

Posted by unhappy999 on 2011-04-28:

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.

Posted by trmn8r on 2011-04-28:

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.

Posted by Yourwelcome on 2012-06-14:

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.