Review: Discover Motiva

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The Discover Motiva card offers a discount for paying on time. But is Motiva's motivation significant?

Credit card users should always pay their balances on time. Unfortunately, that doesn’t always happen. Those who have failed to make timely payments are aware of the harsh late fees and interest rates that can result. But what if there were a card that offered account holders a carrot as well as a stick?

The Discover Motiva Card offers cardholders rewards for spending and a partial rebate of interest charges when payment is made on time.

Advantages

  • Earn cash back: Your first $3,000 of charges each year return only 0.25 percent cash back, or $7.50. After that, you will earn a full 1 percent cash back on most items, excluding purchases from warehouse clubs and discount stores.
  • Get an interest rate reduction for paying on time: Discover will refund 5 percent of the interest paid each month when you make an on-time payment of at least the minimum balance. Note: This is not a rate reduction of 5 percentage points, just a discount equal to the interest paid multiplied by 0.05.
  • Promotional financing offer: New cardholders will receive a 0 percent APR promotional financing rate on both new purchases and balance transfers for 15 months. There is a 3 percent balance transfer fee.
  • Fees: There is no annual fee for this card, and no foreign transaction fees on any charges processed outside the U.S.

Disadvantages

  • Low reward value for low spenders: The first $3,000 in spending each year earns a paltry 0.25 percent cash back, or only $7.50.
  • Low-priced goods excluded from rewards: If you’re like me, you get your gas and some groceries at a warehouse store because it’s the least-expensive alternative. But with this card, you won’t get any cash back for purchases at stores like Costco or Sam’s Club.
  • Negligible discount on interest rates: How much is a rebate of 5 percent of your interest paid really worth? If you have a balance of $1,000 and an interest rate of 15 percent APR, you’ll pay about $12.50 in interest monthly.  Five percent of that amount is a whopping 63 cents you’ll get back for paying on time. Pay late, however, and you’ll pay a late fee of up to $35 and a penalty interest rate between 15.99 percent and 24.99 percent. So this card offers both carrot and stick, but the stick is big and the carrot, small.

Bottom line

Get it if: You are looking for a decent balance transfer card that offers some rewards and no annual fee.

Forget it if: You’re looking to earn valuable cash back rewards on your first $3,000 of spending or expect a big rebate on your interest payments.

(Note: While we attempt to be completely objective when reporting on credit cards, this site may be compensated by issuers when a reader applies for a credit card through the links within credit card stories or on our credit card search page.)

Stacy Johnson

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