Chase Freedom vs. Discover it

April 14, 2015, Written By Jason Steele

Would you like to earn 5% cash back on some of your purchases? Of course, which is why two of the most popular credit cards in the United States feature 5% cash back on up to $1,500 spent each month on select categories of transactions and featured retailers. Chase’s Freedom card and the Discover it card both have a similar rewards program, but there are also many differences between these two valuable reward cards. So let’s take a look and see how these cards compete against each other.

Chase Freedom

The Chase Freedom card offers 5% cash back on up to $1,500 spent each quarter at select categories of merchants and featured retailers, and 1% cash back on all other purchases. For example, the bonus categories for the second quarter of 2015 (April 1—June 30), include Bed Bath & Beyond stores, H&M,, and all restaurants.

Rewards are earned in the form of points in Chase’s Ultimate Rewards program. These points can be redeemed for a variety of rewards including travel reservations, merchandise, gift cards, and cash back.

New cardholders also enjoy 15 months of interest free financing on both new purchases and balance transfers, with a 3% balance transfer fee. There is no annual fee for this card, but there is a 3% foreign transaction fee imposed on all charges processed outside of the United States.

Discover it

Like the Freedom card, the Discover it card also offers 5% cash back on up to $1,500 spent each quarter at designated categories of merchants and retailers, and 1% cash back on all other purchases. For instance, during the second quarter of 2015, the featured retailers are all restaurants and movie theaters.

The rewards earned by Discover card can be redeemed for gift cards, statement credits, or even electronic deposits in your bank account. There are no limits to the rewards you can earn and no minimum amount necessary to redeem rewards.

In addition, those who apply to the Discover it card can choose from two different promotional financing offers. One offer features 14 months of interest free financing on both new purchases and balance transfers, with a 3% balance transfer fee. The other offers six months of interest free financing on new purchases and 18 months of financing on balance transfers, also with a 3% balance transfer fee.

There is no annual fee for this card and no foreign transaction fees. Finally, the Discover card will automatically waive cardholder’s first late payment fee and there is no penalty interest rate.

How These Cards Compare

With such similar reward programs, new applicants will have to look beyond the cash back offers to find other strengths and weaknesses of these cards.  When it comes to the Chase Freedom card, it has several things going for it. First, it’s promotional financing offer for 15 months on both new purchases and balance transfers is very strong, and is slightly longer than Discover’s 14 month offer. In addition, their Ultimate Rewards program is very highly regarded. In fact, cardholders even have the ability to move the points they earned from Chase Freedom to a Chase Sapphire Preferred or Ink Plus account that is held by themselves, a spouse, or a domestic partner. And when those points are redeemed from these other accounts, they can be transferred to airline miles, hotel programs, or Amtrak guest Rewards. This allows cardholders to earn 5x rewards with their Freedom card, and use those same rewards to book award reservations directly with travel partners.

Another outstanding benefit of the Freedom card is that cardholders have access Chase’s innovative Blueprint program, at no additional charge. Blueprint allows cardholders to avoid interest charges by paying some purchases in full while carrying a balance on others. Blueprint also contains valuable budgeting and goal setting tools which allow cardholders to set a date when they want to pay off their balance, and offers a monthly payment amount to meet their goal.

The drawbacks of the Freedom card include its 3% foreign transaction fee, a charge that many card issuers are eliminating. In addition, Freedom has no official policy for waiving late fees, and Chase could impose a penalty interest rate of 29.99% when cardholders fail to make any minimum payment by the date and time due, exceed their credit limit, or have a payment returned.

As for the Discover card, its strengths lie in its customer friendly policies such as the automatic waiving of cardholder’s first late payment and having no penalty interest rate. Furthermore, the Discover card maintains an excellent reputation for customer service and it staffs its call centers with 100% US based representatives.

Its cash back program is also highly regarded, and the Discover card recently announced that customers would even retain the ability to redeem their rewards even after their accounts are closed. Furthermore, Discover is now offering its cardholders a free FICO credit score each month on their statements as well as online.

The drawbacks of the Discover it card are that it may not be as widely accepted as the Chase Freedom, which is part of the Visa payment network. This is especially true overseas, where Discover is being accepted in more countries than ever before, but there still remains some holes in their network. Nevertheless, cardholders will want to take this card with them overseas, as it does not have any foreign transaction fees.

Final Word

These two similar cards may appeal to different users. The Chase Freedom seems best geared to those who can use its promotional financing offer and like earning Ultimate Rewards points. At the same time, the Discover it card has a loyal following of fans who appreciate its focus on low fees and customer service. By understanding the differences between these two popular competitors applicants can choose the right card for their needs, and start earning 5% cash back on many of their purchases.

The information contained within this article was accurate as of April 14, 2015. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.