Chase Freedom versus the Discover it Cash Back card comparison

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The Chase Freedom® and Discover it® Cash Back are about as similar as two credit cards can get. Both cards offer a unique system of rewarding cash back: You can earn 5% back on up to $1,500 spent in categories that change each quarter of the year (after activation), and you’ll get 1% back on everything else. They both have no annual fee.

But there are a few ways in which the two cards are very different — namely, their welcome bonuses and your options for using rewards.

If you’re deciding between the Chase Freedom® and Discover it® Cash Back, here’s a breakdown of how the two cards compare.

We’re focused here on the rewards and perks that come with each card. These cards won’t be worth it if you’re paying interest or late fees. When using a credit card, it’s important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay.

Chase Freedom vs. the Discover it Cash Back: biggest differences

Sign-up bonus

With the Chase Freedom®, new cardholders can earn $200 cash back after spending $500 on purchases in the first three months from account opening. This is a more traditional sign-up bonus than what’s offered by its competitor.

The Discover it® Cash Back doesn’t technically have an intro offer, but it does extend a bonus of sorts to new cardholders. It will match your cash back after your first year. So if you earn $400 in cash back in your first year with the Discover it® Cash Back, Discover will match that $400 for a total of $800 in cash back in your first year. This has the potential to be more valuable than the Chase Freedom’s sign-up bonus, but the trade off is you won’t see it until you’ve had the card for a year. 

Earning cash back

Both cards really shine when it comes to the ability to earn rewards beyond the welcome bonus.

With both the Chase Freedom® and the  Discover it® Cash Back, cardholders earn 5% cash back on the first $1,500 spent on quarterly rotating bonus categories after activation. Beyond the rotating bonus categories, both cards earn 1% cash back on all spending.

Here are the current categories for Q3 (July through September) of 2020:

Discover releases its entire cash-back calendar for the year at once, so we already know that the categories for Q4 of 2020 will be Amazon.com, Walmart.com, and Target.com. Chase, on the other hand, announces the quarterly bonuses ahead of each quarter, though in 2019 the Q4 bonus categories were department stores, PayPal, and Chase Pay.

Due to Discover’s cash-back match for cardholders after the first year, the Discover it® Cash Back comes out ahead of the Chase Freedom in terms of how much you can earn in your first year. If you manage to max out the $1,500 quarterly bonus categories each quarter during the first year, you’ll earn a total of $600 cash back: $300 plus Discover’s match of $300. (And that’s not factoring in any other spending you may use the card for.)

Redemption options

Both the Chase Freedom® and the Discover it® Cash Back earn cash back, meaning you can redeem your rewards for statement credits or deposits into your bank account.

However, if you have an Ultimate Rewards-earning credit card like the Chase Sapphire Preferred® Card or the Chase Sapphire Reserve®, you can convert your cash back rewards from the Chase Freedom into Ultimate Rewards points and use them to book travel.

Depending on how you utilize your Ultimate Rewards points, your Chase Freedom® rewards could be substantially more valuable than cash back. For example, if you’ve accumulated $250 cash back, you can convert that to 25,000 Ultimate Rewards points. Transfer those points to British Airways Avios and you can book a one-way economy-class ticket between the West Coast and Tokyo. The value of that ticket is arguably worth way more than $250 in cash.

Perhaps you prefer nice hotels, in which case you can transfer 25,000 Ultimate Rewards to Hyatt and book a free night at the Grand Hyatt Kauai, where rooms regularly go over $500 per night during peak season. In terms of redemption options, the Chase Freedom offers more flexibility — assuming you also have an Ultimate Rewards-earning credit card.

Intro APR offer

Ideally, you should pay off your credit cards every month. That’s especially relevant when you’re dealing with cash-back cards because you don’t want interest fees to outweigh the value of the rewards you’ve earned.

Nevertheless, if you’re looking for a 0% intro APR to consolidate debt or finance a big purchase, the Chase Freedom® offers 0% intro APR on purchases for 15 months. After that a 14.99%–23.74% variable APR applies.

The Discover it® Cash Back offers a 0% introductory APR for both purchases and balance transfers, though for a shorter period of 14 months (and there’s a balance transfer fee of 3% until October 10, 2020, then 5%). Beyond that, the APR jumps to 13.74% – 24.74% (see terms for up-to-date rates).

Foreign transaction fees

This is an area where the Chase Freedom® comes up short against the Discover it® Cash Back. If you want to use your Chase Freedom ard abroad, you’ll incur a 3% foreign transaction fee. While 3% may not sound like much, most rewards credit cards nowadays don’t impose this fee.

Sometimes we get carried away on vacation and come home to a credit card bill that may be above what we expected. A 3% charge equates to an extra $30 for every $1,000 charges. Why pay for something when you don’t have to? The Discover it® Cash Back doesn’t impose this fee, which gives it a substantial advantage over the Chase Freedom.

That’s not to say the Chase Freedom® isn’t worth considering; it just shouldn’t be the card you take when you travel abroad.

Purchase protection and warranty

It’s not just enough to earn reward son your purchases these days. Purchase and warranty protections are becoming standard for many rewards cards.

The Chase Freedom has a definite advantage here because it covers your purchases against theft and damage for 120 days, up to $500 per claim and $50,000 per account. Cardholders also receive a one-year extension on US manufacturer warranties of three years or less. Meanwhile, Discover discontinued both of these benefits in February 2018. 

Which card should you get?

With the two cards being similar in so many ways, the best option comes down to a few key preferences. If you’re looking for a cash-back card that you’re going to utilize abroad, the 0% foreign transaction fee on the Discover it® Cash Back could save you a lot of money. If purchase protections and added warranties are important to you, then the Chase Freedom is the way to go.

As far as rewards are concerned, the Chase Freedom® could come out ahead, depending on your preferences. In addition to offering an up-front welcome bonus, the Chase Freedom provides more flexibility when it comes to redeeming rewards. The ability to convert your cash-back rewards to Ultimate Rewards points is hugely valuable, especially when you factor in the 5x bonus earnings on rotating categories.

That said, with the Discover it® Cash Back you can get your cash back matched after your first year — so if you only want cash back without the option to redeem for travel, this card could get you more value, at least in the beginning.