Last Reviewed: 11/29/2010

The Discover Motiva credit card is aimed at the ultra-profitable segment of the credit-using population that pays their minimum balances each month, but nevertheless carries a balance.  Remember, credit card companies essentially make little or no money on cardholders who pay their balances in full each month (and actually probably lose money on these folks, since they are stilling paying out rewards).

If you intend on redeeming your rewards in the form of pure cash back or statement credits, then check out our reviews of either the Escape by Discover card (statement credits with some specific restrictions-but a fabulous rewards card) or the Amex Blue Cash Preferred Card, which provides huge rewards in some major categories and will significantly outperform the Discover Motiva card in this aspect.

However, Motiva allows you to purchase partner gift cards using your cash back bonus, and in some cases enables you to effectively double the value of your cashback bonus. These rewards of course come in the form of gift cards, not cash back. GetDebit will describe how to accomplish this below. GetDebit assesses the value of the Motiva card under 3 different use cases:

• If you use it just for cashback rewards
• If you redeem for partner gift cards that increase the value of your cashback by 50%
• If you redeem for partner gift cards that increase the value of your cashback by 100%.

As you will see below, the ranking of the Motiva card varies dramatically based on the manner in which you redeem your cashback bonus.

One final note (really, warning): Motiva actually has built-in incentives to encourage you to not pay your balances in full (see the “Earning Cashback” section below for more info on this). If you plan on carrying balances and paying interest, you should forget about rewards cards altogether, and look for low APR or 0% balance transfer cards.

Earning Cash Back from the Discover Motiva Card

At first glance Motiva has a weak rewards structure. You earn only 0.25% on your first $3k of spend per year, and only after hitting that threshold do you then get to earn just a standard 1% cashback. We did some quick math, and figured out that for the GetDebit base spending profile, the effective cashback reward on a yearly basis is about 0.90%. It only gets worse if you spend less than $2K per month with Motiva. Also note that warehouse-type purchases are always rewarded at 0.25% and also don’t count towards attaining the $3K threshold. This weak rewards structure is why redeeming for straight cash back is, in the words of Sun Tzu, a losing strategy. Did he ever really say that?

Callout: Pay-On-Time Bonus

If you pay at least your minimum balance each month for 6 months in a row, Discover Motiva will refund you the periodic finance charge you  incur in month 7. They call this their “pay-on-time” bonus. The fact is that this bonus is worthless at best, and downright harmful at worst. In the best case scenario (which should be you!), the cardholder always pays his or her balance in full, thus making the bonus worthless (as there is no finance charge to refund). Worst case, a Discover Motiva cardholder untrained in the ways of the Force may feel this is such a great bonus that he/she decides to actually *only* pay the minimum balance in order to collect the highest bonus possible.

GetDebit performed some simple napkin math to come up with an example of how the Pay-On-Time Bonus can really hurt you. We assumed the cardholder charges $2K per month to the Motiva card, and each month only pays the minimum required balance (2% of the outstanding balance). We also assumed the lowest currently published interest rate of 11.99% per annum. Through 7 months you would have paid $527 in interest, but would have been refunded $135 under the Pay-On-Time bonus program, for a net outflow of $391. Meanwhile, you would have earned rewards of about $117.50. So you’d still be down about $274.

Redeeming Motiva’s Cash Back Bonus

Since Motiva is a cashback card, you can deposit earnings directly into a bank account of your choice, or credit your Discover Motiva credit card account. As we’ve mentioned above, if direct cash is your intent, then this card is a dud. For a strong cashback card, you can check out the the Amex Blue Cash Preferred Credit Card.

However, if you are interested in getting gift cards from one or more of the below merchants, then Motiva becomes a significantly more attractive piece of plastic. While there are over 100 merchants offering extra value when you use your cashback bonus, GetDebit has listed only those merchants that give you at least a 30% increase in the value of your rewards.

If you redeem for gift cards yielding 100% increase in the value of your cash back bonus, the Discover Motiva credit card is actually a top 5 ranked cashback card! Even if you average a 50% increase in value, Motiva would still be ranked in the top 10 under most spend assumptions.

GetDebit’s Conclusions about the Discover Motiva Credit Card

When we first started reviewing the Discover Motiva credit card, we were pretty sure it was a dud, given it’s sub-par rewards earning structure. However, if, and only if, you are willing to redeem your cashback bonus for a select number of partner gift cards offering extremely favorable exchange rates, the Motiva card rises like a Phoenix from the ashes to become a force to be reckoned with. This is a judgment you must carefully make prior to getting this card. Personally, for me, I could definitely see myself getting gift cards for car rentals (Alamo, national, enterprise), for Hyatt hotels, maybe Omaha steaks or Samsonite.

If these gift cards don’t interest you, and you want to stick with a Discover Card, then check out our review of Escape by Discover.