Discover it 5% Cash-Back Categories This Quarter (Calendar)

The Discover it® Cash Back card is one of the most popular no-annual-fee cash-back credit cards around. In large part, its popularity is due to a tiered rewards program that features a selection of rotating 5% cash-back categories.

Spending eligible to earn 5% cash back is capped at $1,500 per quarter across all bonus categories (combined purchases), so total potential bonus cash back tops out at $300 per year. But that’s still a substantial haul for a no-annual-fee credit card, especially with unlimited 1% cash back on virtually all other purchases and a powerful Cashback Match welcome bonus that doubles cash-back rewards during the first year.

While the bonus categories change every quarter, the 5% rewards rate never does. That means you can always use the tips below to earn more with your Discover it Cash Back card.

Discover it Cash Back 5% Bonus Category Calendar for 2023

But first, these are the Discover it Cash Back bonus categories for 2023. Discover announces the coming quarter’s categories on the first day of the last month before it begins, which gives you about 4 weeks to plan your purchases.

Quarter of 2023 5% Cash-Back Categories
Q1 (January 1 – March 31) Grocery stores excluding Target and Walmart, drugstores, select streaming services
Q2 (April 1 – June 30) To be announced March 1
Q3 (July 1 – September 30) To be announced June 1
Q4 (October 1 – December 31) To be announced September 1

Longtime Discover it Cash back users know that the card’s bonus cash-back categories tend to recur over the years. Wait long enough and there’s a good chance that your favorite category will come back around, giving you another shot at 5% cash back.

With that in mind, some historical perspective is in order. These were Discover it Cash Back’s 5% bonus categories for 2022:

Quarter of 2022 5% Cash-Back Categories
Q1 (January 1 – March 31) Grocery stores excluding Target and Walmart, fitness club & gym memberships
Q2 (April 1 – June 30) Gas stations, Target superstores and
Q3 (July 1 – September 30) Restaurants, any purchases made via PayPal
Q4 (October 1 – December 31), any purchases made with digital wallets like Apple Pay

How and When to Activate Your Discover Bonus Cash Back

To earn 5% cash back on up to $1,500 in combined category purchases each quarter, you must manually activate your bonus cash back.

Activation isn’t retroactive to the beginning of the quarter. Purchases made in the bonus categories before activation earn just 1% cash back, rather than the full 5% bonus cash back.

So to get the most out of your card, activate before the first day of each new quarter.

To activate, simply log into your Discover credit card account or open the Discover app and follow the prompts. If you receive email notifications from Discover, you can activate through the bonus categories notification email as well.

How Discover Tracks and Calculates Cash Back

Discover awards cash back on purchase transactions only — not cashlike transactions, such as:

  • Balance transfers
  • Cash advances, including ATM withdrawals
  • Gift card purchases regardless of where they occur
  • Gaming purchases, including lottery tickets and casino chips

Cash back is calculated on “net purchases” — the total transaction amount, including tax, minus credits like refunds, chargebacks, or manager discounts.

All purchases eligible for cash back, including bonus category purchases, earn unlimited 1% cash back.

Eligible bonus category purchases earn an additional 4% cash back, for a total of 5% cash back up to the $1,500 combined quarterly spending limit.

After you’ve reached the quarterly spending limit, bonus category purchases still earn unlimited 1% cash back.

Bonus Category Spending Before Activation

Unlike Chase Freedom Flex, the other well-known 5% rotating cash-back credit card, Discover it Cash Back doesn’t retroactively pay cash back on spending in bonus categories before you activate for the quarter.

This means it’s really important to remember to activate on or before the first day of the quarter, or at least before you make your first eligible bonus cash-back purchase for the period.

The good news is that you can still earn the maximum allowable amount of bonus cash back for the quarter if you activate late. You’ll just have to spend more to do so because you’ll have wasted any pre-activation spending.

Other Potential Limitations and Restrictions on Bonus Cash Back

Discover may impose other potential limitations on bonus cash-back earnings. If you’re ever unsure that a particular purchase qualifies for the 5% bonus, check the cardholder agreement and bonus program terms on Discover’s website. And remember that whether you earn cash back or not ultimately comes down to how the merchant codes the purchase.

In addition to the general prohibition on cash back from cashlike transactions, some restrictions are common and notable enough to deserve mention here. Mind these four bonus categories in particular.

1. Gas Stations

This category covers most purchases made at gas stations and highway travel centers:

  • Gasoline purchases made inside the store
  • Gasoline purchases made at the pump, either using the automatic card reader or with the attendant on duty
  • Nongas purchases made inside gas station convenience stores, such as automotive supplies, snacks, and beverages

“Gas station purchases” generally don’t include purchases at warehouse store or superstore gas stations. Think Costco, Kroger, and the like.

You may or may not earn bonus cash back for purchases at auto repair shop or service stations that also have gas pumps present. Such purchases may include:

  • Auto-repair services
  • Automotive parts
  • Car washes
  • Detailing or body work
  • Other automotive products and services

Again, it all comes down to which merchant category code the vendor uses.

2. Internet, Cable, and Phone Services

This category typically includes:

  • Home Internet service
  • Cable TV service
  • Landline phone service
  • Cellular telephone services and data plans
  • Multiservice bundles (cable and Internet, Internet and phone, and so on)

Telecommunications equipment generally doesn’t qualify for cash back unless made directly with eligible service providers when you also buy a service package. So a one-off phone or modem purchase probably doesn’t cut it.

3. Select Streaming Services

This category covers purchases made with select streaming content providers approved by Discover. Approved services include but may not be limited to:

  • Apple Music and Apple TV+
  • AT&T TV Now
  • BET+
  • CBS All Access
  • DAZN
  • Disney+
  • ESPN+
  • Fubo TV
  • Google TV
  • HBO Max
  • Hulu
  • Netflix
  • Pandora
  • Peacock TV
  • Philo
  • Showtime
  • Sirius XM
  • Sling
  • Spotify
  • Starz
  • Vudu
  • YouTube TV

Subscriptions bundled with another product or service may not be eligible. Likewise, subscriptions billed by a third party (such as a cable or satellite provider) may not be eligible. Always check with Discover before assuming your service qualifies.

4. Grocery Stores

This category includes grocery store and supermarket with notable exceptions, including:

  • Prepared foods purchases may or may not qualify
  • Purchases at stores-within-stores, such as in-store Starbucks cafes or sit-down restaurants, generally don’t qualify
  • Alcohol not sold alongside other grocery items (for example, in an attached liquor store with a separate entrance) generally doesn’t qualify

Additionally, purchases at superstores like Walmart and Target likely don’t qualify unless explicitly allowed by Discover.

Tips to Earn More Cash Back With Discover it

Discover’s bonus cash-back categories come and go, which is why they’re called rotating categories. But these tips to maximize your cash-back earnings with Discover it never change. Use them to earn more bonus cash back without compromising your budget.

1. Remind Yourself to Activate Bonus Cash Back Before the Quarter Starts

Discover asks cardholders to activate their 5% cash back categories each quarter. Otherwise, bonus category purchases earn only the baseline cash-back rate of 1%.

The activation itself takes all of 15 seconds from your account dashboard. For busy cardholders, remembering to activate it is the tricky part. Such a small task is easy to lose in the shuffle.

To compound matters, Discover doesn’t grant retroactive bonus cash back. Cardholders who forget to activate until midway through the quarter can’t recover that additional 4% on earlier bonus category purchases.

Maximizing your 5% cash-back earnings — or, at the very least, giving yourself a fighting chance to reach the $1,500 bonus category spending cap — means activating on or before the first day of the quarter.

Fortunately, Discover provides ample time: months, not weeks. If you log into your account more than once per month, you should have multiple opportunities to activate in time. Tilt the odds further in your favor by setting a calendar reminder for the last week of the preceding quarter.

2. Set Up Autopay With Bonus Category Merchants

Before the start of a new quarter, review Discover it’s bonus categories and initiate autopay with any bonus-eligible merchants you already make recurring subscription or bill payments to.

Make your Discover it Cash Back card the default payment method for nonsubscription merchants you regularly patronize too.

Examples of both include:

  • Streaming content providers like Hulu or Netflix
  • Ridesharing apps like Uber and Lyft
  • Grocery delivery services like Instacart
  • Telecommunications companies
  • Third-party payment apps, such as PayPal (but only when the app itself is eligible for bonus cash back)
  • Digital media providers

Be sure to discontinue autopay or remove your Discover it card as a payment method when the quarter ends.

3. Make Larger Purchases With Bonus Category Merchants When It’s Cost-Effective

As long as it doesn’t result in higher net spending, make as many big-ticket purchases as possible with bonus category merchants rather than other merchants selling equivalent products.

For instance, when warehouse store spending earns 5% cash back, find time for an extra Costco run or two. A well-planned journey to the warehouse store supplants multiple trips to the supermarket and probably costs less per calorie — as long as you know what not to buy in bulk.

The same advice applies when home improvement stores are in Discover it’s bonus rotation. An advance purchase of supplies you know you’ll need for a pending home improvement project could be well worth the slight headache of storing them until you’re ready to begin.

4. Move Up or Delay Bonus Category Purchases

Discover reveals bonus quarterly categories many months in advance, giving you plenty of time to create a strategic spending plan.

For instance, if you know gas station purchases are eligible for 5% cash back in a few months, that’s probably when you should schedule the epic road trip you’ve been saving up for.

This strategy is also helpful for ordinary purchases, like grocery store spending. When these sorts of everyday spending categories roll into bonus territory, force yourself to get into a regular groove — say, penciling in a standing date with your shopping card each Saturday morning.

Better to sacrifice an hour each week than to overspend on takeout and miss out on that sweet bonus cash back.

5. Understand Bonus Category Exceptions

Discover’s cash back calendar includes a hefty dose of fine print. Painful as it sounds, it pays to read it all. Each bonus category’s extended description covers exceptions and exclusions — situations in which spending that seems bonus-eligible isn’t.

For instance, when gas station purchases rotate into bonus territory, gas purchases at filling stations associated with warehouse stores and superstores might not. If you’re usually inclined to fill up at Costco or Meijer, try patronizing the Circle K across the road this quarter.

6. Always Have Your Discover it Card on Hand

This one is easy. Give your Discover it Cash Back card a place of honor in your wallet, even if you don’t use it every day. When the opportunity to earn 5% cash back arises, you can be ready to seize it.

Other Credit Cards With Flexible Bonus Cash-Back Categories

Discover it Cash Back is very similar to another credit card with rotating 5% cash-back categories: the Chase Freedom Flex℠ Credit Card.

It shares a lot in common with two other credit cards that have flexible or customizable bonus cash-back categories: the Citi Custom Cash℠ Card and the Bank of America® Customized Cash Rewards Credit Card.

Before you apply for the Discover it Cash Back card, look into these three alternatives and decide which makes the most sense for you. 

Chase Freedom Flex Credit Card

The Chase Freedom Flex Credit Card’s cash-back program is (almost) a mirror image of Discover it Cash Back’s. They have the following things in common: 

  • One to three quarterly rotating 5% categories per quarter
  • Bonus cash back stops at $1,500 in combined quarterly spending ($75 in total bonus cash back per quarter)
  • Bonus categories earns unlimited 1% back above the $1,500 quarterly spend cap
  • Cardholders must manually activate their bonus categories each quarter 

The two cards have important differences as well. The three biggest are:

  • Chase Freedom Flex pays retroactive cash back to the beginning of the quarter as long as you activate by the 14th day of the last month
  • Freedom Flex doesn’t have a first-year Cashback Match offer, though it does have a more traditional spending-based sign-up bonus 
  • Freedom Flex has other bonus cash-back tiers: 5% back on eligible travel booked through Chase and 3% back on purchases at restaurants and drugstores 

Citi Custom Cash Card

Unlike Discover it Cash Back and Chase Freedom Flex, Citi Custom Cash Card has permanent rather than rotating cash-back categories. There are more to choose from as well, currently: 

  • Fitness clubs
  • Grocery stores
  • Restaurants
  • Gas stations
  • Select long-distance travel
  • Select transit (including ride-hailing)
  • Select streaming services
  • Live entertainment
  • Drugstores
  • Home improvement stores

Citi keeps track of your bonus cash-back earnings so you don’t have to. Each billing cycle, you automatically earn 5% back in your top spending category for the period, with no action required on your part. You don’t have to activate your bonus cash back each month, and the categories rarely change, so you can plan purchases well in advance and don’t have to worry about missing out.

Your monthly bonus cash back earnings top out at $500 in eligible spend. That’s $25 in bonus rewards, the same quarterly pace as Freedom Flex and Discover it Cash Back.

Bank of America Customized Cash Rewards Card

The Bank of America Customized Cash Rewards Card has a customizable 3% bonus cash-back tier with your choice of six spending categories:

  • Gas
  • Dining
  • Travel
  • Drugstores
  • Online shopping
  • Home improvement/furnishings

You’re limited to one category at a time, but you can change your selection up to once per month. 

Your 3% cash-back earnings have some restrictions. Each quarter, you can earn bonus cash back on up to $2,500 in combined purchases in your 3% categories and two permanent 2% cash-back categories: wholesale clubs and grocery stores.

To maximize your benefit, maximize spending in your 3% categories. This way, you’ll earn $75 in bonus cash back each quarter. Funny enough, that’s the same quarterly potential as Discover it Cash Back, Chase Freedom Flex, and Citi Custom Cash.

Final Word

As a Discover it Cash Back cardholder, you’re eligible to earn up to $75 in bonus cash back each quarter. That’s as much as $300 cash-back bonus per year — not bad for a no-annual-fee credit card. And you always earn 1% cash back on regular spending, with no spending caps or earning restrictions.

It’s no cakewalk to earn $300 in bonus cash back each year with the Discover it Cash Back card. The first hurdle is remembering to activate your bonus categories. Not all cardholders do.

Beyond that, Discover doesn’t always serve up categories that align with your spending habits. Even if you’d like to max out your bonus cash back in a particular quarter, you can have a tough time scrounging up the requisite spending.

On the other hand, Discover’s bonus categories encourage smarter, less wasteful spending. Each time you substitute a frivolous nonbonus transaction for a bonus category purchase you need to make, that counts as a victory for your budget.

Read our Discover it Cash Back Card review for more details on this card.

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