Discover is known for its cash-back rewards program, the first credit card rewards program where cardholders could get actual cash returned to them, rather than being forced to apply the rewards to their bill. Now Discover is offering a new way to redeem cash back rewards through a partnership with PayPal.

Cardholders who link their PayPal accounts to their Discover card can now use their Cashback Bonus money or miles rewards to pay for online purchases at stores that accept PayPal payments. If they don't have a PayPal account, they can create one through their Discover account.

"We want to make it as easy as possible for our cardmembers to redeem their rewards, especially by partnering with merchants where our Discover cardmembers love to shop," said Shannon Kors, vice president of card rewards and benefits at Discover, in a statement. "Our customers loved seeing PayPal added to this year’s categories in the 5% Cashback program. Now they can spend the rewards they earned with PayPal and have more choices when they pay."

Cardholders will be able to redeem their rewards during the checkout process, and they can choose to use any amount of their rewards for purchase payments. Besides the new PayPal partnership, Discover cardholders can redeem their cash back for gift cards or during the checkout process at Amazon.com. Rewards can also be applied to a Discover bill, deposited into a bank account or donated to charity.

Discover has also released its 2020 5% Cashback Calendar, its quarterly schedule of the categories where Discover will up its usual cash back rate from one percent to five percent on eligible purchases within those categories. This five percent cash back program does have its limits. Cardholders can only earn the bonus rate on up to $1,500 in the category purchases each quarter. It can take up to two billing cycles for the bonus rewards to show up in your account.

Discover does choose popular shopping categories and retailers in this program. For January through March, Discover It and Discover More cardholders can earn five percent back at grocery stores, Walgreens and CVS stores.

From April through June, the categories switch to gas stations, Uber, Lyft and wholesale club purchases, though your wholesale club must accept Discover cards (so if you're a Costco member, you're out of luck, because Costco only accepts Visa).

From July through September, cardholders can earn five percent back from purchases made at restaurants and PayPal qualifying purchases. The latter category includes online purchases made through the PayPal wallet, sending money to friends and family with a Discover card and transactions made at merchants that use PayPal Here card readers for processing debit and credit card payments.

Finally, from October through December, Discover is offering five percent back at Amazon.com, Walmart.com and Target. Com. It's important to note that for Amazon, cardholders can also earn five percent back on in-store purchases made at Amazon Go, Amazon Bookstore and Amazon 4-Star. For Walmart and Target, purchases can only be made online or through the store's app.

The 5% Cashback Bonus program isn't automatic—Discover cardholders have to register for each quarter's promotion, so in order to take advantage of the extra cash back, you have to remember to sign up for each one individually either online or by calling 1-800-DISCOVER. Currently, you can only activate the promotions for the fourth quarter of 2019 and the first quarter of 2020. Even though you may sign up for the first quarter of 2020 now, you won't start earning rewards in those categories until January.