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Get Eggs, Milk And A High-Interest Loan

Discover tends to fling the word “cash” around where it shouldn’t really apply.

Discover offers a cash-advance at the grocery store.In April, I wrote about its marketing campaign that pushed cash advances at ATMs as real cash.

What I didn’t realize is that the company is also going after you at the grocery store.

When I used the self checkout recently, I saw the regular options: cash, credit, gift card and then something else: Discover + Cash.

I had no idea what it was, so I simply chose the credit option. In the stream of coupons the register spit out, again there was a note about getting cash when I use my Discover card at the grocery store.

This is part of a slick campaign called Discover Cash Over where, at the grocery store checkout, you will be prompted to use your Discover card like an ATM card.

The company is once again trying to blur the line between the cash you’d withdraw from your checking or savings account with a debit card and the cash you’d borrow with a credit card.

Discover Cash Over is a cash advance with an APR equal to what you pay on your purchases.

Say I buy $40 worth of groceries with my Discover card. I can also take out $20 cash on top of that instead of making a separate ATM transaction.

If I pay off my balance every month (like I always do), that’s it. I don’t pay anything else to take out the money at the register.

“Discover calculates interest based on the average daily balance on the card. We have a 25-day grace period, and if you pay off your balance in full each month, there is no interest charged,” Matthew Towson, senior manager of community affairs and media relations at Discover, told me via e-mail.

But if I don’t pay off that balance, I’ll be charged 16.99% APR on that $20 in cash. In addition, I’ll still owe the $40 plus interest for the groceries.

So unless you’re paying your balance off every month, THIS IS NOT CASH. It’s a loan, and one you’ll pay for dearly in interest.

This program has a lower APR than the typical cash advance, which has a 23.99% APR on my Discover account. But 16.99% APR is still too high for the convenience of taking out money at the grocery store.

Discover lets you take out up to $4,000 a month through this program.

Don’t fall for it, even if “cash” is written all over it. Make the extra trip to your bank’s ATM for real cash without the interest.

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