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Two of the most popular cash back cards on the market are the Discover it® Cash Back and the Chase Freedom. They both offer a rotating categories rewards structure and no annual fee. With so many similarities, it can be difficult to determine which will add the most long-term value.
Both cards offer 5% cash back on up to $1,500 a quarter on rotating categories and unlimited 1% cash back on all other purchases. You have to enroll in the 5% bonus categories each quarter, and tracking categories can require more work than many people are willing to put into earning rewards. However, those who are willing to put in the extra effort can earn up to $300 a year just by maximizing the 5% rotating categories.
Here’s the breakdown:
|Discover it® Cash Back||Chase Freedom|
|Sign-up Bonus||Discover will match how much cash back you earn at the end of your first year.||$150 cash bonus after spending $500 within three months.|
|Rewards Structure||5% cash back on rotating categories (on up to $1,500 each quarter); 1% on all other purchases – activation required.||5% cash back on rotating categories (on up to $1,500 each quarter); 1% on all other purchases – activation required.|
|Intro APR Offer||0% APR for 14 months||0% APR for 15 months|
|Regular Variable APR||14.24% – 24.24%||17.24% – 25.99%|
|Balance Transfer Fee||3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*||$5 or 5% of the amount of each transfer, whichever is greater.|
Which card is right for you?
Both cards offer a lot of value; you really can’t go wrong with either option. However, each card lends itself to certain situations and spending habits.
For example, let’s say you’ve jumped on the Marie Kondo train and have decided that your old living room furniture from college no longer brings you joy. You’re planning on buying a new set, but you know it will cost a couple grand total. The Chase Freedom offers a longer 0% APR introductory period, but the Discover it® Cash Back offers the possibility of a lower regular variable APR — if you have an excellent credit score, you could qualify for as low as a 14.24% variable APR. With the Chase Freedom, you have an extra month to pay off any purchases, but the Discover it® Cash Back will probably provide the best long-term APR.
On the other hand, the Chase Freedom can be more easily paired with other cards to help you maximize value across the board. If you have a Chase Sapphire Preferred Card or Chase Sapphire Reserve, you can transfer your Chase Freedom rewards over to your other card before redeeming. That way, you can utilize the redemption boost that Chase offers when Preferred and Reserve cardholders use the Chase travel portal or transfer points over to one of their 13 travel partners at a 1:1 ratio.
Sign-up bonus vs. Cash Back Match™
The Chase Freedom offers a $150 cash bonus after you spend $500 within three months. Rather than offering a sign-up bonus, the Discover it® Cash Back will match the amount of cash back you earn at the end of your first year. Both add a lot of value to their respective cards, but you’ll probably get more value out of Discover’s Cash Back Match™.
If you spend $1,600 each month, maximizing the earning potential on the bonus categories each quarter, you’ll earn $432 in cash back each year. If you have the Chase Freedom, that brings your first-year value up to $582 in cash back. If you have the Discover it® Cash Back, you’ll earn an impressive $864 in cash back.
While you do have to wait until the end of your first year to earn Discover’s bonus, the additional $291 is well worth it.
Chase Freedom: Better for existing Chase cardholders
While the Discover it® Cash Back does technically offer a higher first-year value, the Chase Freedom will be a better option for those who already have a Chase Sapphire Preferred or Chase Sapphire Reserve credit card.
Chase allows users to transfer points between credit card accounts owned by the same user. Using the same use-case scenario where you spend $1,600 each month and maximize the 5% rotating categories, here is what your Chase Freedom earnings could be worth:
|When paired with the CSP||When paired with the CSR|
|Typical yearly value*||$540||$648|
*When you redeem for travel through the Chase travel portal.
So if you already have a Chase Sapphire Preferred or Chase Sapphire Reserve, adding the no-fee Chase Freedom to your wallet could give your yearly earnings a major boost.
Discover it®: Better stand-alone card
If you’re not an existing Chase cardholder and aren’t interested in redeeming your cash back for travel, the Discover it® Cash Back will be a better fit for your wallet. As a stand-alone card, the Discover it® Cash Back offers a lot of value, and it’s hard to beat the Cash Back Match™ feature from Discover.
Use the card on all of your purchases, paying special attention to max out those categories and you can earn a significant amount of rewards each year. The Discover it® Cash Back is a card you can utilize year after year.
The bottom line
You really can’t go wrong with either card option. Both have a similar rewards structure and comparable introductory APR offers. Discover’s Cash Back Match™ feature on their Discover it® Cash Back card is most likely going to provide a better reward than the Chase Freedom’s sign-up bonus, but existing Chase Sapphire Preferred and Reserve cardholders will find more long-term value by adding another Chase card to their wallet.
For more comparisons, check out our compare credit cards page.
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