In the land of the cash back credit cards with 5% rotating categories, the 2 top cards that come to mind are the Chase Freedom and Discover It. Both are great options to build long term credit, since neither have an annual fee. When trying to maximize your cash back, there are plenty of options. Which one of these 2 is the better option?
My review: Chase Freedom
My review: Discover It
|Chase Freedom||Discover It|
|Current Sign Up Bonus||$100||$50|
|Spending Requirement||$500 in first 90 days||$750 in first 90 days|
|Foreign Transaction Fee||3%||None|
|Redemption Option||Deposit to account, credit statement, gift cards, transfer to premium card||Deposit to account, credit statement, gift cards|
Credit Score Required:
I think I am going to start putting the average credit score for approved cards. I think it will help you see if you have a good shot being approved or not.
According to Credit Karma the average credit score for the Discover It is 676 with a lowest approval score of 612. The average credit score for the Chase Freedom is 670 with the lowest approval score of 614.
One benefit Discover currently has over Chase is the ability to check you FICO score for FREE. More and more banks are allowing their customers see this score, so I wouldn’t be surprised if in the near future Chase starts this as well.
**I wouldn’t recommend playing this game if your credit score is below 700, but if your credit scores are above the 670’s, it does look promising that you could be approved.**
Sign Up Bonus:
Currently the Chase Freedom has the higher sign up bonus of $100 (10,000 Ultimate Reward Points) in the first 90 days and you will receive an extra $25 (2,500 Ultimate Reward Points) for adding an authorized user. Usually once a year the bonus does increase to $200 (20,000 Ultimate Reward Points) and includes the $25 for adding an authorized user. If possible, I would wait for the higher sign up bonus.
The Discover It is currently offering a $50 sign up bonus for spending $750 in the first 90 days. Occasionally increases to $150, so if possible I would wait for the increased bonus. There is no added bonus for adding an authorized user
Winner: Chase Freedom
This is great reason to keep both cards. Neither one has an annual fee, so if you were to have one or both of these cards,keeping them will only increase the age of your accounts. The age of your credit history accounts for about 15% of your FICO score.
Foreign Transaction Fee:
The Chase Freedom has a 3% foreign transaction fee, so if you leave the country, it is best to leave this card at home. There are so many credit cards that offer no foreign transaction fees. It would be nice to see Chase change this to 0%. Until then, use domestically, not internationally.
The Discover It has NO foreign transaction fees, but isn’t as widely accepted as Visa or MasterCard. You can bring this with you, but some countries might not accept it.
Winner: Discover It
5% Rotating Categories:
You can see that they both have similarities in their calendars. They both offer 5% back on gas, just not during the same quarter, you can earn 5% back on gas for 6 months this year! This year, they share the same 5% quarterly categories with restaurants. Last year this happened with gas :-(. So during this quarter, you would need to decide which card you want to use. Having both of these cards is helpful because they usually offer a great complement to each other to maximize 5% bonuses throughout the year.
I am using my Chase Freedom for this quarter, since I can transfer those points to my Chase Sapphire. It allows more flexility to either use for cash or transfer to Hyatt or United Airlines.
The calendars for next year will be released probably around November/December, so keep an eye out for that!
Winner: Depending on your spending, one might be better than the other. I think they compliment each other very well and for that reason I say it’s a Tie
Both Chase and Discover have their own shopping portals and they usually differ in extra points or cash back given. I always recommend using a shopping portal to earn extra cash or points on purchases you were already going to make.
The Ultimate Reward portal has a wide variety of retailers and gives some great options for additional points on purchases.
The Discover portal typically offers some of the highest amount of cash back for any portal. You will find other portals offer more at times, but Discover is a top ranking portal.
Lets look at an example:
If you were going to shop at Best Buy.
You could use the Ultimate Reward portal and earn an extra 1% ( or 1 Ultimate Rewards) per dollar spent. Or…
you can use the Discover portal and earn an extra 5% cash back per dollar spent .
This is just one example, some of the extra earnings are very close, so make sure you are earning the most back. I typically use cashbackmonitor.com to make sure I am earning the most back.
Winner: Discover It
The Chase Freedom can be redeemed for cash back into your account starting at $25 (2,500 Ultimate Reward Points), credit statement, transferred to premium cards or gift cards. Occasionally Chase will have promotions where you can redeem for discounted gift card, for example, spend $20 (2,000 Ultimate Reward Points)and receive a $25 gift card to Khols.
**To make your points more valuable, you can transfer your points to a premium card like the Chase Sapphire Preferred or the Chase Ink Plus. After you transfer your Ultimate Reward points to a premium card, then you are able to transfer your points directly to transfer partners with Chase. In doing this I was able to book a one way flight to Europe for my wife and myself for 60,000 points and $75!**
If you were to redeeming your Chase Freedom rewards through the Ultimate Reward portal, you will redeem at 1 cent per point on travel bookings. If you transferred your points to a premium card, you would be able to redeem for 1.25 cents per point. Making your points more valuable as well.
The Discover It does not require a minimum amount of cash back to deposit into your account or apply for a credit statement. Redeeming your Discover Cash for gift cards might be the better option than depositing into your account.
When you use your Discover Cash for gift cards you can receive anywhere from 11% to 100 more on your redemption. For example, you can redeem $45 of Discover Cash and receive a $50 gift card to Hyatt or you could redeem $100 of Discover Cash and receive a $200 gift card to Norwegian Cruise Line.
Winner: It depends. If you prefer redeeming your cash back for gift cards (including some travel gift cards) then Discover is better. If you prefer to transfer your points to a premium Chase card and use for travel, then the Freedom would be better.
Both of these cards offer a great way to maximize 5% earnings. Neither one have an annual fee and could be a great option for your long term strategy. I think these 2 complement each other very well and you can find a place in your wallet for both. I would wait until the sign up bonuses increase and the spending requirement is pretty low for both cards as well.
Do you have both of these cards? What’s your strategy using them?