I can’t believe I’m writing this, but at the moment I’m enjoying my Discover Cashback more than any other rewards currency — more than airline miles, more than hotel points, and more than transferable points like Chase Ultimate Rewards or Amex Membership Rewards.
I earned a boatload of Discover Cashback a while ago when they ran a few outrageously generous promotions. For example, when they first offered to double all cash back for a year (which they still do for new customers), the Discover Deals portal was (at the time) often offering terrific rates such as 20% cash back at 1-800-Flowers. And it used to be possible to double-dip: go through the Discover portal to buy a 1-800-Flowers gift card to get 20% cash back, and then again to use the gift card to buy gifts. That way, the 20% double-dipped to 40%, and the cash back match doubled it again to 80% cash back! It was even possible to pay for the gift cards with Amex cards enrolled in a 1-800-Flowers Amex Offer for the equivalent of 30% additional cash back. In total, it paid to buy stuff from 1-800-Flowers. I’m not kidding.
So, what am I doing with all that cash back? Enjoying it! Ironically, more valuable rewards, such as Chase Ultimate Rewards, can be less fun to use because there are so many good uses for those points. Consider Nick’s situation to get an idea of why flexibility can lead to angst: A miles vs points dilemma: Redeem an award or “pay” with points? When there are many good uses for points, it can be emotionally more difficult to part with those points at all.
With Discover Cashback, there are fewer valuable redemption options than with programs like Ultimate Rewards, and so there’s less of a feeling of loss when spending the rewards. The best options with Discover Cashback are to redeem for cash, or to redeem for gift cards at a discount. The latter is where things get interesting. With most rewards programs, the only way to get outsize value from your points is to redeem those points for travel in one form or another. Redeeming points for stuff (gifts, toasters, etc.) is usually a waste. With Discover, though, the value of “points” (cash back pennies) ranges from 1 cent per point when you redeem for cash to 1.5 cents per point for certain gift cards (which can then be used to buy stuff, or travel, or experiences).
Discover Penny Point Values
If you think of each cent of Discover Cashback as a “point” then we can calculate the value of each point when used to buy discounted gift cards, as follows:
- 1.07X (6.7% discount): $70 gets you $75
- Shell, Whole Foods
- 1.11X (10% discount): $45 gets you $50; $90 gets you $100
- Examples: airbnb, Crate & Barrel, Gamestop, Groupon, Hotels.com, iTunes, Lowe’s, Macy’s, TJ Max, many restaurants
- 1.2X (16.7% discount): $25 gets you $30
- Staples
- 1.25X (20% discount): $20 gets you $25; $40 gets you $50; $80 gets you $100
- Examples: Gap, Lands End, LL Bean, Pier 1, SpaFinder, Talbots, The Container Store
- 1.5X (33.3% discount): $20 gets you $30; $40 gets you $60, $80 gets you $120
- 1-800-Flowers (can also be used at associated brands such as 1-800-Baskets, Harry & David, Stockyards, Wolferman’s, etc.)
Maximizing Value
When shopping online it is often possible to maximize rewards and discounts as follows:
- Find the best merchant coupon codes
- Buy merchant gift cards at a discount
- Find the best portal to shop through
- Make sure you are enrolled in the merchant’s rewards program
With Discover Cashback, the second step involves redeeming your cash back for gift cards rather than searching for discount gift cards.
For a in-depth look at this process, please see my post “Real World Instant Extreme Stacking.”
One big negative
Gift cards are available from Discover as either eCertificates and/or physical Gift Cards. The latter can take quite a while to arrive by mail. And, unfortunately, eCertificates aren’t always an option. In those cases, you need to plan ahead for your purchases. Spa Finder is an example of one that’s available only by mail.
Gift cards available as of April 26 2018
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If you are part of the CVS rewards program you will regularly get emailed 30% off coupons – maximum of $99 off per transaction. Stack those with CVS gift cards bought with Discover cash back for additional 10% off.
Question…has anyone used their eCertificate for Airbnb? I purchased 3 of the $90/100 ones today for a reservation and I can’t get them to work. I’ve called Discover and they are valid and available for use right now. I called Airbnb and couldn’t hardly understand what the gentleman was telling me 🙁 He did tell me to contact Discover, which I already have, so I’m just beyond frustrated at this point. Any advice would be swell!!
I would try a different browser, if you haven’t already.
You can’t use Airbnb gift cards or eCertificate for an existing reservation. You can only use them on a new reservation.
Yes I used a bunch of them recently when booking a new reservation. You have to apply them to your account first before making the booking. The only issue I had was that airbnb limits you to loading 5 gift cards per day.
If you have a Costco membership or access to someone who does, you should buy Spafinder there because they already sell them 20% off year-round. For the next couple of weeks, they’re even on promo at 30% off.
Given that you get credit card rewards when you purchase from Costco (and 2% back if you are an Executive member), you’re effectively getting less than 1 cpp of value if you redeem your Discover this way. Costco is only $100 denomination, however. But they are eGC and arrive nearly instantly.
Good tip. Thanks!
Does buying an Amazon gift card at a grocery store register as a grocery purchase? Trying to find ways to maximize the current quarter promo (I don’t buy many groceries)
Yes
One time Discover offered Shell gift cards at half price. I redeemed all of the cashback I had at the time to get those cards. I’ve been sitting on my cashback waiting for something like that to come back.
Wow. I haven’t seen a deal like that
Since DH shops at ACE hardware a lot for home repair projects, I redeem some of our DiscIT rewards to ACE $50 GCs.
Since D Miles redemption is limited to direct deposit or use for travel, I cash out each month. It would’ve been nice if we can consolidate rewards from DiscIt but they don’t allow it or I would have done it to use my Miles rewards for GCs that we use.
I purchased an iPhone and signed up for a second Discover card at the time when they ran two of the ridiculously rich promotions, and earned something like $5,000 worth of Discover points (40% of it may have been credited by mistake as they undid the MS restriction on the Apple Pay promo). Though I just cashed everything out as soon as I earned them. That’s really the beauty of Discover points to me. Like Greg said, the lack of aspirational redemption makes it easier to immediately part with the points, and I’d much prefer getting 1 cent of value today than 1.2 cents worth of gift cards years down the road.
Should have gotten a second discover card during that Apple Pay promo. 22% cashback on up to $10k. Missed opportunity
how to move miles earned from discover miles card to discover it card to get better rates
I don’t think it’s possible unfortunately
One of things I’ve learned over the years with Discover rewards is to grab gift cards I want while they are there. I used to use my Discover rewards on Hyatt gift cards. It was a great way to pay the bar/lunch tab at Hyatt resorts where I paid for rooms with Hyatt points.Then Hyatt disappeared from the Discover gift card list.
A couple of weeks ago, I saw the Hotels.com gift cards and nabbed a few. It is easy enough to combine the balances onto one gift card on the Hotels.com site. That way I’m not messing with multiple cards. I like Hotels.com for boutique hotels and when we visit places that don’t have chain hotels.
Good point!