Chase Freedom vs. Discover it®: Finding the Better Cash Back Credit Card

Simon Zhen

By , Staff Writer
Posted on Tue Sep 9, 2014, Last Updated on Wed Oct 1, 2014

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Cash back is such a great form of credit card rewards — it’s hard to go wrong with cash. After all, it’s a great feeling to know that you’re getting a little money back on your spending.

Two of the more popular cash back credit cards are the Chase Freedom and Discover it® cards. Their cash back programs are so similar that consumers like you can be at a loss when it comes to picking the better one.

Don’t worry. I’ll offer some in-depth analysis to help you make that decision.

Chase Freedom vs. Discover it®: Finding the Better Cash Back Credit Card

These are the criteria that I used to breakdown Chase Freedom vs. Discover it®:

  • Cash back program
  • Online shopping portal
  • Annual fee
  • Interest rate
  • Card coverages
  • Perks
  • Customer service

The card with the most winning categories is named the better cash back credit card.

Note: Chase Freedom comes in Visa Platinum and Visa Signature versions. You don’t get to pick the version you want — it depends on your initial credit limit. If you have a credit limit of $5,000 or less, you get the Visa Platinum; more than $5,000, you get the Visa Signature. Where applicable, I account for their differences.

CASH BACK PROGRAM

Chase Freedom: 5% cash back in categories that change every 3 months on up to $1,500 in combined purchases in these categories; 1% cash back on all other purchases

Discover it®: 5% cash back in categories that change every 3 months on up to a limit in combined purchases in these categories when you sign up (usually $1,500 in combined purchases); 1% cash back on all other purchases

From year to year, I’ve seen the categories change on these two cash back cards. There’s no guarantee that the exact same 5% cash back categories will show up every year.

However, these categories do tend to repeat from year over year. To make things even better, the 5% cash back categories are actually very sensible for their respective quarters (e.g., home improvement during late spring/early summer months). They don’t try to get slick by posting inappropriate 5% cash back categories for the season (such as “get 5% cash back at amusement parks from October through December”) to minimize the bonus cash back that they’d have to hand out.

Just look at the 2014 calendars for the 5% cash back categories on both cards:

Chase Freedom vs. Discover it®: Finding the Better Cash Back Credit Card

Chase Freedom 2014 cash back calendar

Chase Freedom vs. Discover it®: Finding the Better Cash Back Credit Card

Discover it 2014 cash back calendar

As you can see, Chase Freedom and Discover it® have extremely similar 5% cash back calendars.

The cash back limits is also a concern. Both cards will cap how much bonus cash back you can earn in a particular quarter. For Chase Freedom, it has always been $1,500 in combined spending on those 5% cash back categories (1% thereafter). For Discover it®, I’ve seen the quarterly limits change, but it has stayed steadily at $1,500 in combined spending on the bonus cash back categories (1% thereafter) in the past year, just like Chase Freedom.

Since the cash back programs of the two cards are so similar with no clear edge from either card, I’m calling it a tie.

(Chase Freedom would have put up a stronger fight if Chase didn’t announce some negative changes that affect how you’d earn Ultimate Rewards points.)

WINNER (Cash back program): Tied

ONLINE SHOPPING PORTAL

Chase Freedom: Ultimate Rewards offers up to 25% extra cash back through partnered online retailers

Discover it®: ShopDiscover offers 5-20% extra cash back at partnered online retailers

In addition to each card’s cash back program, you can earn extra cash back by using their respective online shopping portals — something definitely worth considering before picking a card. If you make a purchase through these portals, you can get a decent amount of cash back on top of the card’s regular cash back program. Listen, you’re going to make that purchase anyway, why not shop through the portal and pocket more cash?

Because Chase Freedom and Discover it® partner with a good mix of different online retailers, it is difficult to simply say which one offers the better online shopping portal. Something I noticed was that ShopDiscover offers either 5%, 10%, 15% or 20% extra cash back. Meanwhile, the retailer partners through Ultimate Rewards will offer extra cash back that ranges from 1% to to 25%.

To give a better picture of the two online shopping portals, I compare the extra cash back that you can earn at some major online retailers:

Online retailerUltimate Rewards (Chase Freedom)ShopDiscover (Discover it®)
Apple2% bonus cash back5% bonus cash back
Best Buy2% bonus cash back5% bonus cash back
Macy's5% bonus cash back5% bonus cash back
Walmart.com2% bonus cash back5% bonus cash back

Generally, ShopDiscover will provide more bonus cash back through its online shopping portal — Discover it® takes this category.

WINNER (Online shopping portal): Discover it®

ANNUAL FEE

Chase Freedom: No annual fee

Discover it®: No annual fee

These two cards are very much focused on cash back. There’s no crazy travel perks that would warrant an annual fee. Actually, it would seem rather counterintuitive to have to pay an annual fee if it would just negate your cash back earnings (unless that cash back program was so good that you could easily recoup the annual fee plus more).

Nonetheless, it’s a good thing that neither cards have an annual fee — so they’re even in this category.

WINNER (Annual fee): Tied

INTEREST RATES

Chase Freedom: 13.99% – 22.99% variable APR (0% intro APR for 15 months on purchases and balance transfers)

Discover it®: 10.99% – 22.99% variable APR (0% intro APR for 14 months on purchases and balance transfers)

Let’s be blunt here. If you are going to get a cash back credit card, I strongly advise against carrying a balance — you should pay off the entire card balance every month. Otherwise, those interest charges are cutting into your cash back earnings.

If you’re doing it right, you won’t even care what the interest rate is on your card. But, it doesn’t hurt to get the lowest APR possible.

Discover it® has the lower APR range while Chase Freedom carries a slight advantage on the 0% introductory period. However, I’d value that extra month from the introductory period from Chase Freedom less than a lower regular APR from Discover it®, which could last the life of your account.

WINNER (Interest rates): Discover it®

CARD COVERAGES

Every credit card out there offers different types of protection, insurance and waivers. The same applies to the Chase Freedom and Discover it® cards. Since it’s such a long list, I’ve laid out the card coverages in a table for easy digestion.

(Note: Chase Freedom comes in Visa Platinum and Visa Signature versions. Some coverages are available only on Chase Freedom Visa Signature, which is usually offered to cardmembers with credit limits of more than $5,000.)

Online retailerUltimate Rewards (Chase Freedom) CardChase Freedom 
Apple2% bonus cash back5% bonus cash back$0 liability fraud protectionYesYes
Best Buy2% bonus cash back5% bonus cash backPurchase protection120 days after the purchase, $500 limit per claim ($50,000 max. per account)90 days after the purchase, $500 limit per claim
Macy\'s5% bonus cash back5% bonus cash backPrice protection90 days after the purchase, $500 limit per item ($2,500 per year)90 days after the purchase, $500 limit per item
Walmart.com2% bonus cash back5% bonus cash backReturn protection90 days after the purchase, $250 limit per item ($1,000 per year)90 days after the purchase, $500 limit per item
Extended warrantyOne (1) additional year on eligible warranties of three (3) years or lessOne (1) additional year on eligible warranties of three (3) years or less
Travel & emergency assistanceYesYes
Roadside AssistanceYesYes
Auto rental insuranceYesYes
Travel accident insuranceYes (Visa Signature only)Yes (only on air travel)
Trip cancellation/interruption coverageUp to $5,000 per covered trip (Visa Signature only)No
Trip delay reimbursementUp to $500 per covered ticket if trip is delayed more than 12 hours or requires overnight stay (Visa Signature only)No
Lost luggage reimbursementUp to $3,000 per person or $500 per person for jewelry and electronic equipment (Visa Signature only)No
Baggage delay insuranceNoUp to $500 if baggage is delayed at least three (3) hours

Both cards offer a good mix of card protections and coverages, many of which are similar. But, I’m going to give this category to Chase Freedom.

Just look at the table above: Chase Freedom Visa Platinum is pretty much able to match the coverages available through Discover it®.

It may not sound like much, but the extra 30 days offered by Chase Freedom’s purchase protection policy offers more peace of mind for the precious purchases that you don’t want to see damaged or lost.

Meanwhile, if you’re able to get the Visa Signature version of Chase Freedom, you’re able to get a group of handy travel coverages.

WINNER (Card coverages): Chase Freedom

PERKS

Chase Freedom vs. Discover it®: Finding the Better Cash Back Credit Card

Chase Freedom: No pre-set spending limit and travel upgrades and discounts (Visa Signature only)

Discover it®: No penalty APR, no late payment fee for the first late payment, no foreign transaction fees, and a free FICO credit score online and on monthly statements

Perks should be a big factor in your decision process. But, make sure you’ll actually use the card perks, because there’s no point in going with a card with perks that you don’t take advantage of.

Frankly, the Visa Platinum version of the Chase Freedom card does not offer anything in terms of perks — the basic card protections are the most that you’re going to get. With the Visa Signature card, however, you’ll get travel benefits like complimentary hotel stays, late-checkout privileges and car rental discounts and more. The no pre-set spending limit means you can spend more than your reported credit line (yes, Chase will still have a credit line on file) — the allowed excess spending depends on your accounts history.

Discover it® has a slew of perks that downplays the consequences of make late payments. The no foreign transaction fees are great for international travel. The best perk is probably the free FICO credit score that will help you track your credit profile and its improvement, if any. Normally, you’d have to pay around $20 to get a FICO credit score.

Discover it® definitely has the upper edge in this category because the perks are much more practical. Chase Freedom, on the other hand, lacks major perks for its Visa Platinum cards while the Visa Signature perks cater more to travel. If you truly cared about travel perks, you would have went with a dedicated travel credit card.

WINNER (Rewards): Discover it®

CUSTOMER SERVICE

Chase Freedom vs. Discover it®: Finding the Better Cash Back Credit Card

Chase Freedom: Regular 24/7 customer service (Visa Platinum), while 24/7 personal concierge is also available through Visa Signature

Discover it®: 100% U.S.-based customer service available any time

When Discover it® touts U.S.-based customer service, it is trying to tell you that you’ll be speaking to a fluent English-speaking customer service agent. It may be a step up from Chase Freedom’s regular customer service, which may be outsourced.

But, the addition of personal concierge through Visa Signature makes a better case for Chase Freedom. The service will help with dining recommendations, travel bookings, shopping and much more. Personal concierge, even if it’s not available on all Chase Freedom cards, is the nudge that puts Chase Freedom above Discover it® on customer service.

WINNER (Customer service): Chase Freedom

Verdict: Discover it®

Since these two cards are direct competitors, it’s no surprise that this was a close match. In the end, Discover it® won in three categories against Chase Freedom’s two.

Sure, Chase Freedom has better insurances and it even offers free personal concierge (Visa Signature only). But, Discover it® eeks out ahead as the better cash back credit card with its better online shopping portal, lower APRs and friendlier perks — these are the card features that I believe will have a greater impact throughout your cardmembership anyway.

Disclaimer: MyBankTracker was not paid to publish this content, which was not provided, commissioned, reviewed, approved, or endorsed by the company whose products are featured. We may be compensated through an advertiser’s affiliate programs.

 

Post a Comment

  • Peter Bennett

    I agree with your choice. The 3 percent spread in APRs to me is significant and the key influencer for me. Thanks for your detailed and comprehensive piece!

  • Jason

    I have both cards and both are amazing. Discovers cash back program feels a little easier to use while Chase seems to have lower redemption values. I recommend trying both!

    [link removed] (Discover with a $50 Bonus for applying using link)

    [link removed] (Chase $100 Bonus for them)

    What I find is that both cards use the same revolving categories the same time of year but out of my two, I like the way discover allows you to sign up easier HOWEVER chase has lower redemtion values. For example if you want to redeem your cashback for a statement credit, discover makes you have $50 while Chase makes you only have $20.

  • TCAIN

    Yes – well said. I do have Chase cards and 100% SATIFIED with customer service, I do ENJOY travelers benefit as well. The cash back and rewards are EASY to understand and redeem. Now I might consider getting my 1st Discover Card too. Highly educated comparison. Thank you.

    I have stopped using American Express Cards (Platinum and others) due to POOR customer service (mainly out of US), creating FALSE expectation with their marketing and promotions, HIGH interest rates, and requirement of a science degree to understand the cash or MR conversion.

    • http://www.mybanktracker.com Simon Zhen

      On the AmEx customer service, I’m surprised that you experienced less than stellar customer service from them since many people have praised AmEx in that department. Are you going to end up canceling those cards?

  • mark

    Great discussion. I have never tried discover but BC of this article I used Jason’s link below and was approved for $8,000 limit. Can’t wait to try out discover. I called and they said the card should arrive in about 3 days.

  • Paloma San Basilio

    I CANCELED MY DISCOVER IT CREDIT CARD TODAY, IT IS NOT ACCEPTED IN MANY MANY BUSINESSES IN USA, SO WHAT GOOD IS THAT…..

    • http://www.mybanktracker.com Simon Zhen

      Understandable, it’s a common reason for people to shy away from Discover and American Express. Though I would still say that they are accepted in the most places, I have encountered merchants would only take Visa and MasterCard. But, these are usually small mom-and-pop stores and restaurants — and the rewards that I miss out on are not usually a big deal.

  • Sonic

    I got 200 cash back for spending 500 in 3 months

  • Sonic

    From chase