best way to redeem discover cash back?

[aamex]

I know that discover offers 40$ gift cards for certain partners for 20$ in cashback....

but my thought is that just means i'm spending the money i've saved...what are the downsides to redeeming it for cash? I'm considering redeeming it for cash to have it accumulate interest. obviously with todays interest rates it won't double in value..but i'm also not flushing it or letting it sit there...

thoughts?

[Open123]

Direct deposit is always a good choice, but the best values are redeemed for gift cards for merhants with whom you plan to spend. 

For instance, if you were planning to spend $100 at Brooks Brothers, then redeem for a Brooks gift card at $80 for $100, which is a trememdous value.  If you look through merchants, there are tons of good deals to be had for gift cards.

In my view, redeeming for gift cards one will use is the best value for Discover cash redemption.

[bribro]

I don't personally have a Discover card so can't comment specifically, but redeeming for cash in hopes of gaining interest on it sounds like a poor strategy. I'd save up the points and use it to buy gift cards for stores you would shop at anyway.

[SwiftTone]

Earning interest on your cashback sounds like a poor strategy. Savings is paying 0.05% right now, CDs for a year is paying like 0.3%.

I'd just redeem for gift cards for stores that you shop at anyways. most ofthem are $25 value for $20 or $50 for $40. Thats a 25% in return. If you can find APY higher than that in deposit accounts, the gain would be so negligible that it wouldn't matter and not worth it when you consider the time vs return.

[FrugalRican]

I'd rather use it on a retailer like Kohl's. Getting a $50 card for $45 cashback and potentially $10 in Kohl's cash is an excellent deal.

There are also better deals for hotels/cruises where you can save a lot more money. I'd definitely NOT use Discover cashback for actual cash back.

[Anonymous]

Frugal is no longer MIA, Yay... **does a happy dance**

OP- I am actually glad you brought this up, since I just got my first discover last month.  I had not realized the many options for discover cash back, now I will have to weigh them more carefully when I build up points