If you love rewards credit cards, but you’re so over piddly 1% to 2% rewards rates, have we got a showdown for you. Two of the best 5% rewards cards in the industry — the Chase Freedom® and the Discover it® Cash Back — are going head-to-head for your reading pleasure. Here’s what you need to know to determine which 5% rewards card is the best option for you.
|AT A GLANCE|
|Chase Freedom®||Discover it® Cash Back|
|Foreign transaction fee||3%||0%|
|Rewards program||Cash back||Cash back|
|New cardmember bonus||Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening||Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.|
|Who would want each card?|
Chase Freedom® vs. Discover it® Cash Back: Rewards
The Chase Freedom® offers 5% back in categories that change every three months, on up to $1,500 in spending quarterly. The current categories:
|Chase Freedom® bonus rewards categories for 2019|
|Q1 (Jan. 1 - March 31)||• Gas stations.
|Q2 (April 1 - June 30)||• Home improvement stores.
• Grocery stores.
|Q3 (July 1 – Sept. 30)||• Gas stations.
• Select streaming services.
|Q4 (Oct. 1 – Dec. 31)||• Department stores.
• Chase Pay.
Check out NerdWallet’s tool to prequalify for Chase credit cards.
For any spending above the $1,500 cap, you’ll receive 1% back. You’ll also receive 1% back on all other purchases. The Chase Freedom® offers a cash signup bonus: Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.
Cardholders can also use the Chase Ultimate Rewards site to get up to 10% cash back on online purchases.
Discover it® Cash Back
The Discover it® Cash Back also offers 5% back in rotating categories that you activate, on up to $1,500 in spending quarterly. The current categories:
|Discover bonus rewards categories for 2019 and 2020|
|2019 categories||2020 categories|
|Q1 (Jan. 1 – March 31)||• Grocery stores.||• Grocery stores.
|Q2 (April 1 – June 30)||• Gas stations.|
• Uber and Lyft.
|• Gas stations.
• Uber and Lyft.
• Wholesale clubs
|Q3 (July 1 – Sept. 30)||• Restaurants.|
|Q4 (Oct. 1 – Dec. 31)||• Amazon.com.|
• Target (in store and online).
For any spending above the $1,500 cap, you’ll get 1% back, and you’ll also get 1% back on all other purchases. For new cardholders, there isn’t a sign-up bonus, per se, but there’s an offer that might be even more lucrative: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
Chase Freedom® vs. Discover it® Cash Back: Fees
The Chase Freedom® has an annual fee of $0 and foreign transaction fees of 3%. It offers an introductory APR of 0% on Purchases and Balance Transfers for 15 months, and then the ongoing APR of 16.74% - 25.49% Variable APR.
The Discover it® Cash Back has an annual fee of $0 and no foreign transaction fees. That said, Discover isn’t as readily accepted overseas as Visa or MasterCard (see our list of countries that accept Discover). Its APR is 0% on Purchases and Balance Transfers for 14 months, and then the ongoing APR of 13.49% - 24.49% Variable APR.
Chase Freedom® vs. Discover it® Cash Back: Additional benefits
The Chase Freedom® is a great card to go along with the Chase Sapphire Preferred® Card. You can earn rewards in the 5% quarterly bonus categories and transfer them to the Chase Sapphire Preferred® Card to redeem for travel at a rate of 1.25 cents per point through Chase Ultimate Rewards.
The Discover it® Cash Back will waive your first late payment fee, and it doesn’t have penalty APRs or over-the-limit fees. It gives cardholders their free FICO scores on monthly statements and online.
The bottom line: Should I get the Chase Freedom® or Discover it® Cash Back?
If you spend in line with one card’s bonus categories, you should choose that card. Otherwise, go with the Chase Freedom® if you also have the Chase Sapphire Preferred® Card and you want the cash bonus, and the Discover it® Cash Back if you’re an avid online shopper and/or may use your credit card in a foreign country that accepts Discover.
Two boxers facing off image via Shutterstock