The Fight for 5%: Chase Freedom vs Discover it

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The Chase Freedom® and Discover It® are two of the most popular cash back credit cards on the market. These cards have a lot in common so it can be a tough decision if you’re trying to decide between the two. We’ve put Chase Freedom and Discover It head-to-head in four important categories so we can see which card comes out on top.

1. 5% Cash Back Categories

The Cash Back programs on these credit cards are very similar. To sum it up, both cards offer 1% back on all purchases as well as 5% back on the first $1,500 of spending in specific categories that rotate each financial quarter. Needless to say, the 5% cash back is the main attraction for both of these rewards cards, and if the categories align with your spending, they can both be very lucrative pieces of plastic.

Due to similar categories, the crux of the cash back comparison comes down to the quality of the rotating categories. After all, if you don’t spend money in the 5% categories, then both cards only offer a measly 1% back.  Here’s a look at the current 5% categories for the Chase Freedom and Discover It for 2015.

 

Jan.-March

April-June

July-Sept.

Oct.-Dec.

Chase Freedom:

Groceries, Movies, & Starbucks

Restaurants, Bed Bath & Beyond, H&M, & Overstock.com

Gas, & Kohl’s

Amazon.com, Zappos.com, Audible, Diapers.com

Discover It:

Gas & Ground Transportation

Restaurants & Movies

Home Improvement stores, Dept. stores, & Amazon.com

Amazon.com, department stores, and clothing stores

It can certainly be difficult to compare the quality of the bonus categories objectively because everyone spends their money differently. However, there are a few common themes and strong points worth pointing out.

With both cards, there is typically a major bonus category each quarter and then one or more categories or retailers. Historically, the four major categories have fallen in line with how most consumers already spend their money. These include gas, groceries, dining out, and shopping categories. Here are my thoughts on how the categories stand now:

Chase Freedom®: This card does a good job of taking a broad approach and hitting all of the major spending categories. Also, I’m sure the addition of Starbucks was a big hit for the first quarter of the year. But the Chase Freedom falls behind the Discover It when it comes to shopping because it only offers a select few retailers.

Discover It® - 18 Month Balance Transfer OfferThe Discover It Card is a great choice for the avid shopper with a long list of retailers in the summer months and holiday season. I like the fact that quarter 1 categories cater to both types of commuters; those that don’t drive, such as New Yorkers, and those that drive every day and need to put fuel in their tanks. The major thing this card lacks in comparison to the Chase Freedom is an “everyday” category that everyone needs; groceries.

Cash Back Category Winner: Chase Freedom

This was a very hard choice because both cards have solid categories for their 5% cash back. Each have their pros and cons, so it’s really up to you to decide which card works best with your spending habits. The main factor that pushes the Chase Freedom ahead is that it has a quarter dedicated to groceries, while the Discover it does not. In my opinion, this makes the 5% cash back categories on the Chase Freedom more applicable to the average consumer. It’s definitely a close race, and if you do a lot of shopping on Amazon.com or in department stores, then the Discover it may be the better choice for you.

2. Interest Rates and Fees

Neither of these cards comes with an annual fee, which is pretty great considering the lucrative rewards they offer. Both cards come with an intro APR on purchases and balance transfers, but with the Discover it, there are actually two “it” offers available (excluding student offers); one offers 0% APR on both purchases and balance transfers for 12 months, and the other offers 0% APR for 18 months on balance transfers and 6 months on purchases.

Meanwhile, Chase Freedom offers 0% intro APR on both purchases and balance transfers for 15 months. After the intro period is up, the interest rate on both Discover it cards will jump to 11.24%-23.24% and on the Chase Freedom it will be 14.24%-23.24% depending on your creditworthiness.

Both cards come with the typical 3% fee for balance transfers and Chase Freedom has a 3% foreign transaction fee, while Discover it does not. It’s worth noting, however, that many merchants overseas don’t accept Discover cards, so having no foreign transaction fees isn’t really a huge benefit.

Rates and Fees Winner: Discover It

Having two choices for the intro APR is a great perk of the Discover it card that you don’t see anywhere else on the market. Also, if you have excellent credit, you will probably be approved for a lower on-going APR with Discover it than you would with Freedom.

3. Sign-Up Bonus

Credit card sign up bonuses change all the time, so this is another difficult factor to compare. However, Discover recently released a new and improved, limited time sign up offer that will double all cash back earned at the end of the first year of card membership. This offer is the first of its kind in the cash back arena and effectively allows new cardholders to earn 2% back on all purchases and 10% back in the rotating categories!

While the Chase Freedom Card recently offered a generous $200 bonus if you spent $500 in the first 3 months, the typical sign-up bonus is $100 cash back. However, right now Freedom is offering $150 cash back, which is a pretty good bonus for cash back cards with no annual fee. There is a chance to earn another $25 Bonus by adding an authorized Freedom user and having them make a purchase.

Sign-Up Bonus Winner: Discover It

Discover’s recent change to double your cash back at the end of your first year is an excellent offer that is grabbing a lot of attention. What really makes this offer stand out is that there is no limit to how much you can earn - the more you spend on your Discover card in the first year, the bigger your bonus will be. So unless you plan on spending very little in the first year, Discover’s current double cash back offer will beat the sign-up bonus on every other cash back card on the market, including Chase Freedom.

4. Additional Features

There are a number of differences between Chase Freedom and Discover it when you get into the smaller details. Not all are worth mentioning, but here are a few “intangible” benefits that each card offers:

Chase Freedom:

Discover It

  • Freeze It feature offers added control over card security
  • Free FICO score available each month to all Discover card holders
  • Discover consistently receives top ratings for customer satisfaction
  • Travel accident insurance
  • $0 Fraud Liability if your card is used by an unauthorized user

Additional Features Winner: Discover It

Discover is continually adding helpful benefits to their long list of perks for every cardholder. They also boast 100% U.S. based customer service that continually wins recognition as being the best in the industry. As long as you don’t run into issues with your card not being accepted, you will probably be very satisfied with the great additional features that Discover has to offer.

And the winner is…Discover It!

As we mentioned earlier, credit card offers are always changing, especially with rewards cards. The banks are constantly competing with each other by releasing new and improved offers. That being said, Chase Freedom and Discover it are two of the top cash back credit cards on the market.

While they each have their pros and cons, the recent “double cash back” bonus and the ability to choose between two intro APRs are the main factors that bump the Discover it card just ahead of Chase Freedom. 

*Editorial Note:This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.

*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.

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