Maximizing the Discover Double Cash promo: 5X Rotating categories

This is the second of a series of posts describing how to make the most of Discover’s Double Cash Back promotion.  Discover is offering to double all rewards earned for an entire year.  Both new and existing card members are eligible (existing members must call to sign up).  Only new cardholders are eligible.

Please see other posts in this series:

• Maximizing the Discover Double Cash promo: Which card is best? How many can I get?
• Maximizing the Discover Double Cash promo: Huge rewards via online shopping!

Rotating categories

The Discover It card offers 5% cash back rewards in categories that change each quarter.  Card members can earn 5% cash back within those categories, up to $1500 spend per quarter.  The 2015 5% calendar is/was as follows:

• Jan-March Gas & Ground Transportation
• April-June Restaurants and Movies
• July-Sept Home Improvement Stores, Department Stores, and Amazon.com
• Oct-Dec Holiday Shopping & More

There is no guarantee that Discover will have the same categories next year.  Let’s look, for example, at older 5% calendars:

2014:

2013:

2012:

As you can see above, the categories have remained fairly stable over the past four years, but there have been some changes:

• Between 2012 and 2013, Discover replaced one of the Gas categories with Restaurants & Movies
• Between 2014 and 2015, Discover changed up the order of the categories. They moved Gas Stations to the first quarter and moved Restaurants & Movies and Home Improvement each to a later quarter.
• In 2015, we see a number of changes to the details:
  • “Home Improvement & More” became “Home Improvement Stores, Department Stores, and Amazon.com”
  • “Gas Stations” became “Gas & Ground Transportation”
  • “Online Shopping & Dept Stores” became “Holiday Shopping & More”

For the most part, the 2015 changes have been positive in that they’ve added additional ways to earn 5%.  One small concern is the change in the name of the 4th quarter category.  Will most online purchases continue to earn 5% as they have in the past?  We’ll know more when registration opens up in September.

5X to 10X

Since the 5% category bonus is limited to $1500 spend each quarter, the most a card member can earn at 5% is $75 cash back per quarter; or $300 per year.  If you get two Discover It cards, you could theoretically double that to $600 per year.  Then, thanks to the Double Cash promo, you could earn as much as $1,200 in one year.

Maximizing 5X categories

While its technically correct to say that one can earn up to $600 per year per card via the quarterly 5X categories and the Double Cash Back promotion, it’s not particularly realistic.  I doubt that many people routinely spend $1500 per quarter in each of these categories: Gas & Ground Transportation; Restaurants and Movies; Home Improvement Stores, Department Stores, and Amazon.com; and Holiday Shopping.

Fortunately, even if you don’t routinely spend that much within each category, there are ways to maximize earnings.  Let’s look at each category to see ways in which to get the most out of them…

Home Improvement Stores, Department Stores, and Amazon.com (July – Sept 2015)

This one is such a broad category that it may be realistic to spend $1500 without a lot of effort.  Simply use your Discover card when shopping at any of the eligible merchants.  It’s important to note, though, that discount stores are usually not coded as department stores.  For example, you most likely will not earn 5% at Walmart, Target, KMart, etc.  Fortunately, though, there are qualifying stores that sell gift cards to other merchants.  A great example is Lowes, which tends to carry a great assortment of gift cards:

The idea is to buy gift cards at Lowes that you plan to use in the future.  For example, suppose you’re planning a Disney trip.  You could buy Southwest Airlines gift cards to cover the flights, and Disney gift cards to cover park admission.  Or, if your trip involves a lot of driving, buy gas gift cards and restaurant gift cards for those chains that you’re likely to stop at along the way.

If you don’t have specific spend plans, you could buy eBay gift cards and use those later to buy stuff you need, including other gift cards.  The latter is particularly effective when gift cards are on sale through eBay (which happens often).

For more details of gift cards available at Lowes, please see: Gift cards at Lowes.

If you’d prefer to buy gift cards online, quite a few options are available through Amazon.com (click the image below to see more):

Holiday Shopping & More (Oct – Dec 2015)

In the past, this category included all online purchases.  And, in the past, Amazon Payments allowed sending money to friends and paying with a credit card, for free.  It was a very easy way to earn 5% cash back within this category.  This year, its unclear at this time whether all online shopping is included.  Plus, since October 13th 2014, Amazon no longer supports person to person payments.

Even if it doesn’t include all online purchases, I have no doubt that the definition of Holiday Shopping & More will be quite broad.  And, as a result, many people will be able to max out this category without special tricks.  For those looking for tricks, though, we will have to wait until more details are available.  If online shopping is still included, it might be possible to use an online service like Plastiq to pay bills with your Discover card and earn the category bonus.  Plastiq does charge a 2.5% fee, but that would be well worth it to earn 10%.  I’ll test this out in October if online shopping is in fact supported.

Gas & Ground Transportation (Jan – March 2016, maybe)

If Discover repeats this year’s category bonuses, then we can expect to see Gas & Ground Transportation in the first quarter of 2016.  There are a few easy ways to max out this category:

1. If you know that you’ll spend $1500 in gas eventually, you could simply buy $1500 worth of gas station gift cards from your favorite gas station chain.
2. Some gas stations sell gift cards for other merchants.  Buy gift cards that you know you’ll use.  Also check local convenience stores to see if they code as gas stations.  Many 7-11 stores, for example, code as gas stations and sell gift cards.  Check the Visa Supplier Locator (found here) to see how your local convenience store is coded.
3. Don’t forget about Ground Transportation.  This year, the category included “local and suburban commuter transportation, such as ferries; passenger railways; taxicabs, limousines and rental cars; and charter/Tour bus lines.”  That’s a pretty broad list!  Some have reported that services like Lyft and Uber worked as well.  And, it is possible to buy gift cards directly from Uber to apply to future rides.

Restaurants and Movies (April – June 2016, maybe)

If Discover repeats this year’s category bonuses, then we can expect to see Restaurants & Movies in the second quarter of 2016.  I find this category tough to maximize beyond regular restaurant & movie spend.  Of course, if there’s a restaurant that you visit often, you can buy gift cards there during the category bonus and use those gift cards throughout the year.  As to gift cards for other merchants, you could try video rental stores.  The current terms state (bolding is mine): “Movie purchases are those made at merchants classified as movie theaters, video rental stores, and online movie ticket services.”  If you still have any open video rental stores in your area, its worth a stop to to see if they have a gift card rack.

Next up: online shopping

So far, in this series about Maximizing the Discover Double Cash promo, we’ve covered:

• Which card is best?  And, how many cards can one person get? (found here); and
• Maximizing 5X Rotating categories (this post)

Next, I’ll cover the really big opportunity: the Discover Deals online shopping portal.  Coming soon.

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