It Pays to Discover — Well Maybe Not So Much

I'm sure you've noticed all those ads on TV for credit cards. I'm going to talk about a few things abut those ads.

One of them is Discover which promises a certain percentage of cash back on each purchase. They also offer specials where you get a higher percentage of cash back on a specific item you purchase. Recently it was 5 percent back on gas. I think this ran for a couple of months. Usually the offers of cash back aren't that. Mostly they run 1 or 2 percent.

Not bad considering how expensive gas can be.

The interesting thing is how and when you are able to use the cash back you've accumulated. If you want to use your cash back for buying something from a merchant, you only have to earn $25 before you can start spending. But if you want it in actually cash say to make a payment on your card you have to wait until you earn $50 to use it.

Now if you were getting 5 percent back on most of your purchases, you'd get to that $50 threshold rather quickly. But that's not the case. In most cases you're only getting the 1-2 percent back. So it's going to take a little while to get there. Several thousand dollars of charging items to get there in fact.

You'll also notice that that fact isn't mentioned in any of the ads.

The other thing that bugs me about the ads is all the benefits they advertise with the card. Like Discover has this late payment forgiveness. Capitol One has a miles program with no black out dates. The only problem is that these are all for new customers. If you are an existing customer you're out of luck. You don't get these offers.

How is that exactly fair?

It reminds me of one time when I cancelled a credit card. They came back with all sorts of offers for me. A lower interest rate being the chief among them. This was because I was such a good customer. I said well if I was such a great customer I shouldn't have had to threaten to quit to get the lower interest rate. I just should have gotten it because I was a good customer. They didn't have a come back on that one. I then added this makes me want to cancel the card even more.

It seems to me the smart thing to do would be to allow people to upgrade to those new cards. Maybe once year sort of like getting a new phone.

Until all that discovering is not all it's cracked up to be.