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Here's Discover's 5% cash-back calendar

Here are the bonus 5% cash back categories for eligible Discover credit cards.

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The Discover offers on this page are no longer available via CNBC. As a result, Discover offers described on this page may be out of date.The Discover it® Balance Transfer offer is not currently in market.

Eligible Discover credit card holders can now activate bonus 5% cash-back categories for the third quarter of the year. Cardholders earn 5% cash back on up to $1,500 in spending across purchases made at restaurants and PayPal from July to September (then 1%).

Below, CNBC Select reviews the Discover cash-back calendar for 2020, and how you can use a 5% cash-back card to your advantage.

Discover cash-back calendar 2020

Discover revealed its full 5% cash-back calendar for 2020, so you can take a look at the bonus categories for the whole year.

Here are the bonus categories for 2020:

  • January to March (activation closed): Grocery stores (excluding Target and Walmart), Walgreens and CVS
  • April to June (activation closed): Home Depot (June only), gas stations, Uber, Lyft and wholesale clubs
  • July to September (activate now): Restaurants and PayPal
  • October to December (activate starting Aug. 1, 2020): Amazon.com, Target.com and Walmart.com

Discover cardholders that can benefit from up to 5% cash back include: Discover it® Cash Back, Discover it® Student Cash Back, NHL® Discover it® and Discover it® Balance Transfer.

Discover cash-back calendar vs. Chase cash-back calendar

Discover and Chase are the two most popular card issuers offering 5% cash-back cards. Here's a side-by-side comparison of the two cash-back calendars for 2020.

Quarter Chase Discover
January to MarchGas stations, select streaming services and internet, cable and phone servicesGrocery stores (excluding Target and Walmart), Walgreens and CVS
April to JuneGrocery stores, select streaming services, gym memberships and fitness clubsHome Depot (June only), gas stations, Uber, Lyft and wholesale clubs
July to SeptemberAmazon.com and Whole Foods MarketRestaurants and PayPal
October to DecemberTBAAmazon.com, Target.com and Walmart.com

This comparison shows that for 2020, both Discover and Chase included common spending categories, such as gas stations and grocery stores, in their calendars. Plus Discover included restaurants, while it's yet to be released if Chase will too. In 2019, Chase didn't include restaurants.

How 5% cash-back credit cards work

To earn 5% cash back, you're required to activate bonus categories each quarter. After you activate bonus categories, you can start earning 5% cash back on eligible spending. Discover lets you set up email alerts and you can add reminders to your calendar, so you don't forget to activate.

Earning 5% cash back isn't unlimited. Each quarter, after you spend a combined $1,500 in the bonus categories, the cash-back rate drops to 1%. This maximum spending requirement resets every quarter.

All other purchases made outside the bonus categories automatically earn 1% cash back. If you want to optimize the amount of cash back you can earn, we recommend using an alternative cash-back or rewards credit card for spending outside the bonus categories, so you earn at least 2% or 2 points per dollar spent.

The Citi® Double Cash Card ranks as No.1 cash-back card with no annual fee and earns cardholders an effective 2% cash back: 1% when you buy and 1% when you pay for purchases.

Don't miss: Chase Freedom 5% cash-back calendar

Information about the Discover cards have been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.