Discover More and Chase Freedom: 5% cash back is great and two ways to get it is even better

I am a huge fan of Discover’s credit card, and I am certainly not alone. Discover has ranked very well in several customer satisfaction surveys in recent years, receiving an award for best call center in the Credit Card Industry in 2010, and coming out on top in various areas directly related to consumers, including ease of online application and general customer satisfaction. Despite this, however, when I praise the Discover More credit card to friends or family, I often hear the same objection: “but no one takes Discover!”

I am guessing this response was probably the impetus for Chase’s launch of the revamped Chase Freedom card in March of last year. The Discover More card, which offers 5% cash back on purchase categories that rotate every quarter is clearly a good idea. Chase makes it even better by trading in the customer service but offering a card that is accepted almost everywhere.

If you are in the market for a credit card with a permanent place in your wallet, both of these cards are worth considering.  Although eligible purchase categories rotate quarterly, 5% cash back on a credit card is an amazing deal right now, especially when the cards come without an annual fee.

Notably, the rotating calendar for which you can earn 5% cash back is not identical between the two cards, so that owning one of the cards does not necessarily mean there’s no point to owning the other. Here are 5% cash back categories for 2010 Chase and Discover side by side:

Importantly, both of the cards cap the 5% cash back you can earn each quarter. Discover’s varies by quarter, such as $800 spent on the categories in the first quarter (effectively $40 cash back) and $300 in July –September ($15 cash back). The Chase Freedom card, on the other hand, caps the 5% cash back to $1500 spent ($75 cash back) on eligible categories each quarter. So if you are a big spender on the cash back credit card, the Chase Freedom card is probably a better option for you. But if you’re a big big spender, getting both cards is even better since you can charge purchases in the categories that overlap between the two cards to the Chase Freedom card, and then charge purchases in the other eligible categories to the respective card.

Excepting the 5% cash back categories and purchases made through the credit card portal, the Discover More card offers a standard .25% cash back on the first $3000 spent each year, and 1% thereafter. The Chase Freedom card is a step above, offering 1% cash back on every purchase not earning 5%. Nonetheless, you may be able to find cards that offer more value than 1% cash back (such as an airline credit card), making these two cards really good secondary cards, used mainly for purchases eligible for the 5% cash back. Besides, neither of the two cards has an annual fee, so you don’t have to reach any spend threshold to make owning either of the cards “worth it”.

Even though Discover’s card came out first, the Chase Freedom card is coming out ahead for now. Discover has the better customer service, but Chase uses the Visa network and is therefore accepted in many more places. Which card offers the better set of rotating categories will depend on your lifestyle, but Chase’s higher cap on purchases for which you can earn 5% cash back continues to push the Chase Freedom card ahead. And Chase’s current offering of $100 as a sign-up bonus only makes the deal sweeter.

If you are going to get only one of the two cards and are not one of those unlucky people who have to use customer service frequently, the Chase Freedom will probably be the one for you. But given the slight difference in 5% cash back categories between the two cards and the lack of annual fees on both, there may also be no harm in letting the Discover More share in your wallet real estate. If you need a nudge, try calling the Discover call center to sign up over the phone and you will see the difference.

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