Discover it® vs. Chase Freedom®: Which cash back card is right for you?

Young woman standing in front of a beautiful canyon while debating if she should get the discover it vs chase freedom Young woman standing in front of a beautiful canyon while debating if she should get the discover it vs chase freedom Image:

In a Nutshell

Discover it® and Chase Freedom® both offer 5% cash back in rotating categories, but which is the better card? The answer may depend on your lifestyle and spending habits.

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Getting 1% or 2% cash back on your rewards credit card is certainly better than getting nothing.

What’s more, you may value the simplicity of a flat-rate card such as Chase Freedom Unlimited®  or the Citi® Double Cash Card .

But if you’re in the business of maximizing rewards and want a card that offers up to 5% cash back, your decision will likely come down to one of two cards: Discover it® vs. Chase Freedom® .

These two rewards-earning powerhouses have a lot in common. They both offer up to 5% cash back in rotating bonus categories, and they both come with an impressive sign-up bonus.

But one card may be more appealing than the other, depending on your needs and lifestyle.

Before we dive into why that may be the case, let’s look at how these two cash back contenders compare head to head.

At a glance: Discover it® vs. Chase Freedom®   

Discover it® Chase Freedom®
Annual fee $0 $0
Sign-up bonus Dollar-for-dollar cash back match after account is open for 12 months (for new cardmembers) $150 after you spend $500 on purchases within the first 3 months from account opening; 2,500 bonus points (can be redeemed for $25 cash back) when you add your first authorized user and make a purchase within the first 3 months from account opening
Rewards 5% cash back on up to $1,500 in rotating quarterly categories; unlimited 1% cash back on all other purchases 5% cash back on up to $1,500 in combined purchases in rotating bonus categories each quarter you activate; unlimited 1% cash back on all other purchases
Variable APR for purchases and balance transfers 13.99% – 24.99% 16.99% - 25.74%

 

  1. Best for sign-up bonus
  2. Best for rewards points
  3. Best for card benefits
  4. Heads up: What to consider when applying for a card with rotating rewards categories
  5. Bottom line: Which card is right for you?
  6. At a glance: Other rewards cards to consider

Best for sign-up bonus

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This one’s a pretty close call, so you’ll need to ask yourself which is more valuable: Chase Freedom® $150 sign-up bonus or Discover it® dollar-for-dollar cash back match after one year.

Alex Gerard, CEO of personal finance website Cards Mix, has a hard time picking a favorite in this category. “Both cards are a very close match,” he admits. “However, they are tuned a little differently.”

It all comes down to how much you plan on spending — and where you plan on spending it.

The Discover it® cash back match promotion means that you’ll essentially earn 2% cash back on all purchases and a whopping 10% cash back in bonus categories for the entire first year as long as your account is not closed and you are still in the cash back reward program at the time Discover calculates your potential award.

If you spend over $1,500 combined in your first four quarterly bonus categories, you’ll surpass the Chase Freedom® $150 sign-up bonus and still have the chance to earn more.

With that said, Chase Freedom® has one advantage that could put it over the top: You can earn $100 cash back (up to $500 per year) for each friend you invite who gets the card.

Best for rewards points                                   

Discover it® and Chase Freedom® both offer cash back rewards of up to 5% in merchant and product categories that rotate quarterly, so this contest is a dead heat.

The categories themselves aren’t always the same, but it’s difficult to definitively say one card offers better categories than the other.

For April through June 2017, for example, Discover it® offered a 5% bonus at home-improvement stores and wholesale clubs. During those same months, Chase Freedom® offered 5% cash back on grocery and drugstore purchases, excluding Target, Walmart and other discount stores.

“The categories are very close,” Gerard says, “showing how tight the competition on cash back cards is.”

Best for card benefits

Discover it® edges out Chase Freedom® with some added security benefits such as the Freeze it® feature, which functions as an on/off switch for certain activities on your account in case you misplace your credit card.

If you’re worried about someone finding your card and going on a spending spree, this feature (accessible via the website and mobile app) can be a serious relief. Free overnight card replacement is a nice perk, too, though you hopefully won’t have to use it too much.

Otherwise, the shopping benefits between these two cards are equally impressive. Both feature zero liability protection, which means you won’t be held responsible for unauthorized charges made with your card or account information.

Heads up: What to consider when applying for a card with rotating rewards categories

Before choosing a cash back card with rotating categories, look closely at the terms and conditions. You’ll want to know when rewards categories change, how they might be limited and whether there are any other restrictions.

Cards such as Discover it® and Chase Freedom® can be a lot more lucrative than their flat-rate counterparts, but they also take a little extra legwork. To take full advantage of these cards, you’ll have to commit to activating and spending in specific categories each quarter. If that seems like too much of a headache, consider looking for a more straightforward cash back card.

Bottom line: Which card is right for you? 

These are both great cash back cards, and it’s hard to go wrong with either. The best card for you likely depends on your lifestyle and spending habits.

We recommend Discover it® if you’re confident you’ll spend enough in the first year to make the cash back match worth it. Remember: Spending $1,500 combined in quarterly bonus categories may net you $150 cash back in the first year, and the rest is gravy.

If you’re not planning on using your credit card as much but can spend at least $500 on purchases within the first three months to take advantage of the sign-up bonus, Chase Freedom® could be the card for you. This is especially true if you plan to rack up points internationally, since Chase cards are more widely accepted than Discover cards.

On the other hand, if you’re traveling to a country that does accept Discover, you won’t pay any foreign transaction fees with Discover it® while Chase Freedom® charges a 3% foreign transaction fee. If you plan to travel overseas, consider this factor before making your choice.


At a glance: Other cash back rewards cards to consider

Citi® Double Cash Card Unlimited 1% cash back when you make purchases, plus an additional 1% as you pay for those purchases for a total of 2% cash back on all purchases
Blue Cash Everyday® Card from American Express 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%), 2% back at U.S. gas stations and select U.S. department stores, 1% back on other purchases
Chase Freedom Unlimited® Unlimited 1.5% cash back on every purchase

 


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