Discover Apple Pay Postmortem
Now that the Discover Apple Pay 10% cashback promotion and all of the other end of year madness is over, I have had time to settle down a bit and look back at things. I thought it would be a good idea to look back at my Apple Pay purchases, calculate what I’ll get back and show you a huge mistake that cost me quite a bit of money.
My Original Strategy
When I first heard about this promotion, I wrote that I would probably purchase gift cards to get to the $10K spending limit. My thoughts at the time were simple. Paying fees on gift card purchases made sense given the large amount of cashback. For example, purchasing 48 X $200 Visas at Staples for $206.95 would amount to $9,933.60 in spending and result in $2185.39 in cashback after doubling. Subtract out the $333.60 in fees and you have a nice profit.
No Gift Cards
Of course Discover became wise to our plans and very early on added a simple restriction to this promotion. Gift cards were excluded. That really stopped me for awhile and I began to procrastinate. That was my first mistake. I procrastinated so much that I came into December with almost no Discover Apply Pay spend. As you’ll see a little later that cost me.
Reselling in December
When it came to reselling, December was an inspired month for me. I found deal after deal and began to sell at a breakneck pace. Thankfully this inspired me to begin to search out in-store Discover Apple Pay opportunities. I found many deals at Staples, Best Buy (Apple products) and Gamestop among other retailers. It was great, but there was one huge limitation.
The Float & Low Credit Lines
I was floating a ton of money during the reselling process since I was ramping up inventory that wouldn’t pay me for awhile. This situation wasn’t bad per se, but not really ideal either. Due to this abnormally high float, I was juggling account balances and statement dates. I didn’t want statements to print while there was a high balance, so I would stop using a card shortly before the print date and pay it off.
Unfortunately our Discover cards presented a problem because the statements printed in the end of the month and both cards were maxed out. I tried to increase our limits, but that didn’t help much. I ultimately had to divert funds, payoff these cards and wait for the statement to print. Once I did that, there wasn’t enough time to recycle the credit limit again once I found deals to purchase.
Final Spend
In the end, my wife’s card which has a low limit of $3,500 was the issue. I ran into capacity constraints and only spent $8,000 out of the possible $10,000 on the card. Not a bad final number and I’ll certainly take the extra $1,600 after doubling, but I also left $2,000 in spending on the table. If only I hadn’t procrastinated in October and November. A ~$400 mistake.
My card was a bit different. It has a higher credit limit and thus I was able to spend the full $10K on it. Actually, this was the second mistake. I didn’t spend $10K, but $12K in Apple Pay purchases with it. For some reason I mixed up the scenarios with mine and my wife’s cards and thought I had to use up the whole limit to reach $10K. It turns out I was wrong. $2K+ wrong!
A Huge Dilemma
Since we came down to the wire with our purchases, I ended up buying stuff at about breakeven in order to make sure I hit the $10K limit on my card. Since those extra $2K in purchases won’t earn the bonus, I am spending time and resources for no profit. While I can return the products, I’ll probably just sell them, since their purchase raised me up to a higher elite tier in the store’s rewards program.
I also lost out in another way. Since I will only earn 1% in cashback, I lost out on the rewards I would have earned if I had paid with a different card. In my case I have a ThankYou Preferred with a 3X anywhere retention offer, meaning that I lost out on those higher spending rewards. Of course, it probably couldn’t hurt my relationship with Discover to have some non-bonused spend and that 1% does get doubled to 2% at the end of the year.
What I Will Make
Despite that last bit of over-purchasing, I still do not have any costs associated with my $18,000 in Discover Apple Pay spending. This means that between my wife and I, we will earn a total of about $3,960 or 22% of the $18K in spending once all doubling occurs. That is not bad at all.
Takeaways & Conclusion
In the end this was a fantastic deal and even though I screwed up a bit, I came out way ahead. For me this situation is a good reminder of two things. First, I need to not procrastinate. Had I not been feverishly trying to complete this and many other end of year deals, I wouldn’t have mixed things up. Organization wasn’t the problem, I was. Which brings me to my final lesson learned. Despite how much I study and live this stuff, mistakes happen. I am not perfect, but I am still doing pretty well.
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Highly doubtful they’ll repeat this again. In my VERY LONG history with Discover (10++ years) , I’ve never seen a widespread 10% type bonus like this one before. But what I discovered (no pun intended) were quite a few merchants that didn’t take Discover but took other cards for Apple Pay. When I ran into this at one supermarket, it turns out that their RFID credit card was just not setup for Discover returning an “account invalid” message. But I wrote an email to them and they fixed this within two weeks. Since Discover was added to Apple Pay in October 2015 I presume merchant card terminals were just not updated immediately for this change.
So the conspiracy theorist in me says that Discover offered this carrot for us to give feedback to them and the merchants where it didn’t work. A quick twitter search shows that there are still merchants where this Discover still isn’t setup correctly.
I also suspect many gift card purchases went through. I just got 10% bonus for a month where I had one and I believe I did it after they added the restriction.
Do you think there is any way that Discover/Apple Pay would make this 10% cashback offer available again during 2016? I learned about it very late on December 29th! Thanks.
There is no way to know, but it was such a generous promotion I doubt we will see it again soon.
@shawn my story is exact copy of ur story. Everything is same except I did 9k on wife. Still feeling good abt this whole promo. It was fun