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So here's a tidbit of information you might like to store away. As you know, Discover has a payback program of "upto" 1%. The "upto" means that the more you charge the closer you move to the 1% payback.

Discover also has a premium type card that will pay up to 2%, but this card has an annual fee.

I called Discover to inquire about the details and the breakdown is this: You will have to charge \$7000.00 per year for the two cards to break even, taking into consideration the annual fee and percentage return.

So, if you like discover (more places are accepting it) and you charge more than \$7000.00 / year, than the premium card is the one for you. I'm trying an experiment this year and am using my Discover almost exclusively to see how much I will charge and how much I'll get back.

peace...

kelvin
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kelvin wrote:

>>>>>
Discover also has a premium type card that will pay up to 2%, but this card has an annual fee.

I called Discover to inquire about the details and the breakdown is this: You will have to charge \$7000.00 per year for the two cards to break even, taking into consideration the annual fee and percentage return.
<<<<<

So what you're saying is the annual fee is \$70, right?

Card 1: \$7000 * 0.01 = \$70 back
Card 2: \$7000 * 0.02 = \$140 back; \$140 - \$70 = \$70 fee

Personally I might have to object to a \$70 fee as a matter of principle. That's ridiculous in this age of no-annual-fee cards. But I can see why Discover is doing it -- the 2% refund is a nice incentive to the mathematically challenged.

I don't want to knock Discover too much; they've got a nice concept with their card, and it's a shame they aren't accepted at more places. However, if you're charging over \$7,000 annually, there's a much easier way to save a percent -- spend 1% less. >8->

Have Fun,
- Steve Eley
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<<So what you're saying is the annual fee is \$70, right?

Card 1: \$7000 * 0.01 = \$70 back
Card 2: \$7000 * 0.02 = \$140 back; \$140 - \$70 = \$70 fee

Personally I might have to object to a \$70 fee as a matter of principle. That's ridiculous in this age of
no-annual-fee cards. But I can see why Discover is doing it -- the 2% refund is a nice incentive to the
mathematically challenged.

I don't want to knock Discover too much; they've got a nice concept with their card, and it's a shame
they aren't accepted at more places. However, if you're charging over \$7,000 annually, there's a much
easier way to save a percent -- spend 1% less. >8->>>

The fee is not \$70, because the payback is not a flat 1% or 2%. The payback is tiered based on the number of dollars spent over the year. I think the fee is \$18.00.
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```That's 1% cash back is a bit misleading. It's broken up
in different amounts. I don't recall the exact amounts,
but here's a totally hypothetical example. Suppose you
charged \$7K last year. You'd get say 0.25% for the
first \$2K, then 0.5% for the 2nd \$2K, then 0.75% for
the 3rd \$2K, and finally 1% for the last \$1K.

\$2K @ 0.25% = \$5
\$2K @ 0.5%  = \$10
\$2K @ 0.75% = \$15
\$1K @ 1%    = \$10
-----------------
\$7K           \$40```
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<<I'm trying an experiment this year and am using my Discover almost exclusively to see how much I will charge and how much I'll get back.>>

Ah, but Kelvin, just make sure you aren't charging things that you wouldn't be buying if you were using cash. There's not much good in getting 2% back on purchases that you would've avoided.

This has always been something I've wondered about with programs that offer cash back. It's a clever incentive for those that are cautious and selective in their card use, but I have to question if people tend to use their card more if they justify the expenditures with the idea of the rebates.

I've "discovered" this card in the past, but airmiles benefit me more.

Tony
...but I still am...

Off2Aruba
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<<So, if you like discover (more places are accepting it) and you charge more than \$7000.00 / year, than the premium card is the one for you. I'm trying an experiment this year and am using my Discover almost exclusively to see how much I will charge and how much I'll get back.>>

I have a "slippery slope" theory, or in view of where I just was, I should say, "camel's nose" theory on credit cards. If I start charging money on the credit cards, it is real easy to get out of what I can pay off in a month. When there is an incentive to charge \$7000 a year, it would be easy for me to end up in some mega debt without meaning too. Add to that, Discover charges a huge amount of interest. In other words, I let the camel get his nose in my tent, next thing I know, the whole animal is inside.

George
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<<Ah, but Kelvin, just make sure you aren't charging things that you wouldn't be buying if you were
using cash. There's not much good in getting 2% back on purchases that you would've avoided.>>

Tony, you're absolutely correct. In my case, however, I will not use my credit card any more than normal. I will just try to exclusively use the Discover. I still pay off the card every month, but if I can charge my groceries, or Costo visits (which I have to do anyway) then the experiment is to see if my spending habits will be more or less than the 7000 mark. I know for a fact that I could charge more just for the sake of charging, but I have to wake up the next morning and deal with the bills. I've learned my lesson (haven't we all) and once will suffice.

kelvin