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Subject:  Discover, the Fine Print Date:  7/9/2007  5:37 PM
Author:  Patzer Number:  255399 of 312612

When Sam's Club started taking MasterCard again, I converted my Discover to a Discover Gas Card (now called a Discover Open Road Card). When I signed up, the deal was 5% back on gas and auto repairs at several places I don't want to use, i.e. 5% back on gas. There was a limit of $1200 of 5% purchases per year.

If I had stayed home, I might or might not have put $1200 of gas on the Discover in a card year. That's a moot point, because I took a driving vacation last week. I bought enough gas that when I came home, I started a spreadsheet to track the Discover purchases and see when I would run out of the $1200.

Lo and behold, one of the items in my held mail was a Discover change in terms and conditions. In addition to no longer counting Warehouse (i.e., Sam's Club) and 5% purchases towards the tiers for getting more than 0.25% cash back, the limit on the 5% for gas is redefined as $100 per billing cycle. For reference, my four most recent billing cycles had gas purchases of $101.27, $90.22, $122.51, and $102.39. For the current bill cycle, there's $300+ and counting due to my trip last week.

Fortunately, the changes don't take effect until October 1. That means I can take another trip next month, use up most of the $1200 for the current card year, and just put one tank a month on Discover until I hit $1200. I will then have several months to contemplate what to do about this.

Another piece of the fine print tells me that as of November 1, any cash back earned will be forfeited if my account is inactive for 18 months (up from 36 months). Hmm. Put this together with Discover's requirement that cash back can only be redeemed in even $20.00 amounts, and it's likely that I give up some change if I get mad at the complexity and stop using the card. Let me think about this.

Option 1: Try to milk the full $60 per year out of the 5% back. This would mean tracking the charges to the penny, ending a transaction on a partial fill of the gas tank when the month got to $100, and continuing the tank with a purchase on Citi MasterCard. Then there's the risk that one of the transactions is delayed and hits the wrong bill cycle. I don't think I'm willing to go to that much work.

Option 2: Track the cash back I've earned. Try to make it come out as close to $20 as possible, then stop using Discover. This is attractive, because I get every last penny on the table then no longer have to jump through the ever-changing hoops.

Option 3: Just use Discover for one or two tanks of gas per month. When a large fill would break $100, quit using Discover until the next month. This is a bit more work tracking than I like, but keeps the card active.

Option 4: Pick a date (October 1 is sounding possible) when Discover's terms become so complex that I'm no longer willing to wade through them. Take the easy 1% back from Citi MasterCard instead of trying to wade through the Discover complexities to avoid the 0.25% back.

I'm leaning towards Option 2 or Option 4, but I'll spend some time thinking about it. Discover seems to be motivated by a desired to change terms so that the Discover Get More card means Discover gets more and its customers get less. In the grand scheme of things, I think there's other complex stuff I could spend my time on that would pay better than $60 per year back from Discover.

I understand that Discover probably loses money on customers like me who only use the Open Road card for 5% purchases. But since Discover seems disinclined to offer competitive cash back other than as temporary gimmicks, they aren't motivating me to become a profitable customer for them.

No hard feelings, but perhaps it's time to look for a different cash back card to back up Citi.

Patzer
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