Comparing The 5% Categories Of Discover it Card And Chase Freedom

Aug 19, 2013

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Update: Some offers mentioned below are no longer available – Discover it® Cash Back, Chase Freedom, British Airways Visa Signature CardChase Sapphire Preferred Card

Update: The current cash back categories for the Discover It card can be found here. To see the current 5% categories for the Freedom card visit this link.

I currently don’t have a Discover card because I prefer to accrue airline miles and hotel points, but several readers have recently emailed me about how they earn a ton of cash back with Discover, so I thought I’d take a look at their no-fee Discover it card and compare it to the Chase Freedom – a card that I currently have and leverage every quarter.

As of August 1, 2013, Discover made changes to the Discover It consumer card including no annual fee, no over limit fee, no foreign transaction fee and no late fee on your first late payment. There is also a generous 5% cash back offer on up to $1,500 in purchases at gas stations now through September 2013.

Similar to the Chase Freedom which has quarterly rotating categories of merchants and retailers where cardholders earn 5 points per $1 up to a $1,500 quarterly cap, the Discover it card rotates the type of vendors from which you can maximize your benefits.

Having previously focused on Restaurants & Movies and Home Improvement earlier this year, from July 1 through September 30, 2013, the best way to cash in with your Discover Card is by filling up your gas tank. The purchases must be made at standalone gas stations and do not count towards determining your eligibility to earn 1%.

With summer road trips in full swing and the price of gas fluctuating constantly (premium is currently at $5.19 a gallon at my local 76 station!), this offer is not to be scoffed at. The next category will be Online Holiday Shopping, which is just as helpful and topical.

Discover Shopping Partners copy
Redeem Cashback at Amazon, iTunes and Facebook.

Once you have racked up the savings, you can then redeem your cash back in the following ways:

  • Direct deposit:Straight into your bank account
  • Statement credit: Use your cash back bonus to credit your Discover card account
  • Pay with cash back bonus:  Use it to shop with Discover partners, Facebook and iTunes.

The Chase Freedom card also offers 5% cash back offer on up to $1,500 in purchases each quarter at a rotating roster of merchants. Now through September 30, 2013, those categories include not only gas stations, but also theme parks – including Disney locations, Sea World, Legoland and Universal Studios properties around the country – and Kohl’s department store. You will also still get 1% cash back on all other purchases.

You have to activate your 5% categories every three months in the following ways:

  • Online: Visit
  • Text Message: Sign up for Chase Freedom 5% Text Reminders at and you’ll get a text reminding you when it’s time to activate.
  • Email: Provide your email address at and they will send you an email when it’s time to activate.
  • Phone: Call the number on the back of your card and let an advisors activate your 5% cash back.
  • Facebook: ‘Like’ Chase Freedom at
  • Chase location: Visit any Chase bank and see a personal banker.
Chase Freedom earning opportunities.
Chase Freedom earning opportunities this quarter.

The current activation deadline for this quarter is September 14, 2013. Even if you don’t have the card yet, but were planning on getting it, Chase will retroactively credit you with the bonus points on your category spending from the whole quarter if you sign up before the deadline. On your statement, your bonus cash back earned prior to your activation date will be broken out separately based on the categories you earned them in. If you have multiple Chase Freedom accounts, be sure to activate them all. After this, the Q4 spending bonuses will be Select Department Stores

Freedom’s 5x spending bonuses are one of the best ways to rack up bonus Ultimate Rewards points using your Chase Freedom Visa or Freedom Mastercard. The only downside is the $1,500 quarterly cap ($6,000 annually). That’s still a potential total of 30,000 Ultimate Rewards points annually, which is pretty lucrative for a card with no annual fee.

Redemption options include travel gift cards.
Redemption options include travel gift cards.
  • You can redeem your rewards at a rate of 1:1 the following ways:
  • Redeem for cash back: Redeem for $20 or more in cash back and choose a statement credit, direct deposit or a paper check.
  • Redeem for merchandise gift cards: Exchange for gift cards at outlets such as Kohl’s, Outback Steakhouse, Best Buy, and Macy’s. For full details, click here.
  • Redeem for travel gift cards: Spend earnings for travel gift cards such as Marriott and Fairmont that can be spent on rooms, restaurants or hotel services.
  • Ultimate Rewards transfer partners: If you have one of Chase’s premium travel credit cards like the Chase Sapphire Preferred Card, Ink Bold or Ink Plus, you can also combine the Ultimate Rewards points you earn with your Freedom card with those from your premium cards and transfer to the program’s 10 travel partners including British Airways, Korean Air, Southwest, United, Virgin Atlantic, Hyatt, Marriott, Ritz-Carlton, IHG Rewards and Amtrak.

Which is the best deal?  Discover it vs. Chase Freedom 

Sign-up Bonus: Discover it has no sign-up bonus, but the Chase Freedom offers 10,000 points ($100 worth in cash back) after you spend $500 within three months. Winner: Chase Freedom.

Rotating Categories: Past Freedom 5x categories included gas stations, drug stores, Starbucks, restaurants, movie theaters, and Lowes. Currently you can earn 5x with your Freedom card at gas stations, theme parks and Kohl’s and for the final quarter of 2013 the bonus categories are and select department stores. With the Discover it card, you will earn 5% cash back from now through September 2013 at gas stations and on online holiday shopping from October to December 2013.

For me personally I think the Discover it categories are broader, but it depends what you spend your money on so to each their own. Winner: Slight edge to Discover.

Earning opportunities: While both cards allow you to 5% cashbback at gas stations this quarter, Chase Freedom also includes theme parks and Kohl’s, meaning families can really benefit. Winner: Chase Freedom.

Shopping  redemption partners: You can redeem Discover cash back at and iTunes, which undoubtedly have endless shopping options, however unless you play games, Facebook is not a portal that many adults shop at. The Chase Freedom card partners with a variety of gift card companies, giving you much more flexibility in spending options. You can also redeems earnings with travel gift cards such as at Marriott or Fairmont, allowing you to then earn even more points at your destination. Winner: Chase Freedom.

One-stop shopping portal: Discover has the ShopDiscover site, where you can browse over 200 shopping retailers and earn 5-20% Cashback bonuses at retailers such as Orbitz, ProFlowers, Puma, and Dell. Chase Freedom does not have a comparable shopping portal. Winner: Discover it Card.

Annual Fees: There are no annual fees with either card. Winner: Tie.

Late charges: Paying late with the Discover it card will not raise your APR, and you will also have the penalty fee waived on your first late payment. The Freedom card does charge late fees of up to $35, and while they don’t have an official first late fee waiver, judging from customer feedback it appears that they are flexible if you call and explain why your payment was late. Winner: Discover it Card.

Foreign transaction fees: There is no foreign transaction fees for the Discover it card. Chase does have a large collections of cards with no foreign transaction fees including the Chase Sapphire Preferred, Ink Bold, British Airways Visa Signature Card and the Southwest Visa cards, but the Freedom card charges you 3% when you use it abroad. Winner: Discover it Card.

Overlimit fees: Neither card has an over limit fee. Winner: Tie.

Career crisis assistance: Discover it offers the option of getting a lower rate, lower payment or other help if you lose your job. Chase Freedom does not offer this. Winner: Discover it Card.

Refer a friend to Discover Cashback through Twitter and earn $50 if they become a cardmember.
Refer a friend to Discover Cashback through Twitter and earn $50 if they become a cardmember.

Refer a friend bonus: Share your Discover cash back with friends on Facebook, LinkedIn, Twitter or via e-mail and get a $50 reward if they become a new card member ( can refer up to 10 new cardmembers).  Chase Freedom did have a similar referral offer last year but it has since ended. Winner: Discover it Card.

Where the card is accepted: As the Chase Freedom card is a MasterCard or Visa card, it is accepted at more places than Discover. Winner: Chase Freedom.

Unlimited 1% cash back on all other purchases: Both cards offer this, however, the Chase Freedom also has 2% cash back on select airline tickets and hotel accommodations booked through Ultimate Rewards. Winner: Chase Freedom.

Quarterly cap: Both cards have a $1,500 cap per quarterly rotation. Winner: Tie. Overall, both cards have a similar rewards structure but if choosing one or the other I would opt for the Chase Freedom since the points can be transferred to valuable airline partners if you also have a Chase Sapphire Preferred or Ink Bold/Plus, which I do. Also, I can never stress the value of Ultimate Rewards enough because Chase has such great transfer partners including British Airways, Korean Air, Southwest, United, Virgin Atlantic, Hyatt, Marriott, Priority Club, Ritz-Carlton and Amtrak.

Finally, as the Freedom is a Visa or a MasterCard, you are always likely to find a vendor that accepts it over a Discover card. However, the Discover it card gives a lot more flexibility with payments and has less fees than Freedom.

So if you’re looking for a solid cash back card and don’t care about transferring points to airlines, then Discover it can be a solid choice- especially since there is no annual fee, but for better diversity of 5% cash back categories as well as the potential to transfer your points to Ultimate Rewards’ transfer partners with a premium card combination, the Chase Freedom should be your top choice as a card that offers the flexibility to earn both cash back or use those points for travel.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.