November 1 is a special day in the credit card world. That’s because it is the day that Discover announces the 2020 categories for the Discover It Card. Unlike Chase, Discover reveals their entire calendar for the year on November 1. Chase reveals the Chase Freedom’s next category two weeks before the next quarter starts.
The Discover It earns 5% cash back on rotating quarterly categories and just 1% on non-bonus spend. It’s not a travel card per se. But you can use the cash back for travel expenses that cannot be paid for with points or miles. The Discover It is also my oldest active card and one that I use when the category works for my spend.
What’s Going On?
The 2020 categories for the Discover It are as follows:
- 1st Quarter: Grocery Stores, Walgreens, and CVS
- 2nd Quarter: Gas Stations, Uber, Lyft, and Wholesale Clubs
- 3rd Quarter: Restaurants and Pay Pal
- 4th Quarter: Amazon.com, Walmart.com and Target.com
The current category is also Amazon.com, Walmart.com, and Target (in store and online purchases).
Analysis
Discover’s categories for 2020 are eclectic and they should be useful for many people. Not everyone is going to use the card for all four quarters. But the Discover It is a great card for those who want to earn 5% when the category is useful.
1st Quarter
Discover is starting the year off nicely with Grocery Stores, Walgreens, and CVS Pharmacy categories. I like the Grocery Store category because earning 5% cash back rivals some of the better cards from American Express for no annual fee. But the American Express Gold Card and the Blue Cash Preferred earn more than the Discover It all year long for groceries.
Furthermore, Walgreens and CVS won’t generate as much spend for a lot of people. But having them for the first quarter could be nice to increase cash back earnings on pharmacy purchases.
2nd Quarter
Discover switches to a quartet of categories led by Gas Stations for the second quarter. I personally won’t be using this category because I get my gas at Costco, which only accepts Visa cards. That also eliminates the Wholesale Clubs category for me. However, a lot of people shop at Sam’s Club and other wholesale clubs that accept Discover. Earning 5% there will be bountiful.
Some travelers will also like the 5% on Uber and Lyft, which are popular means of local commuter transit lately. This is the first year that Discover is not giving 5% for “local commuter transit”, which was a more general category in the past.
3rd Quarter
Next, Discover moves onto Restaurants and Pay Pal for the third quarter. The Restaurants category is a repeat of 2019’s third quarter category. And for me, I will be splitting dining expenses between my Chase Sapphire Reserve and my Discover It. This strategy might not sound practical for a lot of travelers. But I did it last year and earned some cash back to diversify my spend.
Pay Pal is an easy way for people to send money to others online. For some cardholders, using the Discover It for Pay Pal expenses is an easy way to earn 5% cash back next year.
4th Quarter
Finally, Discover will earn 5% on online purchases from three major retailers: Target, Walmart, and Amazon. This category is a repeat of this year’s fourth quarter category with one difference. Target purchases in-store will not earn 5% cash back.
This category is useless for me because I prefer to shop at a brick and mortar store. But it’s a huge category for many because of holiday shopping. Therefore, there is no reason to discount it.
Final Draw
2020 is going to be an interesting year for Discover It cardholders. Discover is offering an eclectic set of categories throughout the year. Now is the time to think about if the categories align with your current spending habits and lineup of cards.
Plus, revealing these categories gives Discover a first-mover advantage against Chase. They had the time to pick the categories and control the 5% card niche a month and a half before Chase. However, Chase can select the Freedom’s categories based on what Discover has revealed today. Chase can take back the upper hand by knowing what not to pick. They have the option to go a different route or compete with Discover by choosing the same categories. Chase has gone both ways in the past.
One of the purposes of this post is to serve as a reminder to register for Discover’s categories. You can register for the current (4th Quarter 2019) category until December 15, 2019. And you can register for the next (1st Quarter 2020) category starting today. Use the link below to register for both categories.
