The maligned card has a cult following — for good reasons.
The words “Discover Card” seems to most often be used in a sentence like this: “Oh yeah, and we also take the Discover Card.”
That’s usually a merchant telling customers he accepts Visa, MasterCard, and American Express. The Discover Card seems as overlooked as the letter Y does when reciting a list of vowels.
Too bad. It’s a good card.
Taking another look at Discover
The Discover Card was created in the 1980s by Sears, when it was the largest retailer in the United States. Originally, it was known for having no annual fees and competitive cash-back rewards at a time when few cards offered both. It was also able to establish a strong base of retailers who accepted it, due to its lower merchant fees.
Discover never seriously challenged Visa, MasterCard, or American Express for dominance, but something interesting happened: Discover grew a loyal customer base full of raving fans.
Those fans boasted about the excellent customer service and low fees while enjoying their simple rewards programs. The Discover Card now has its own cult-like following, akin to popular brands like CostCo, Trader Joe’s, and Southwest Airlines.
So are these cards really a good deal?
In 2013, the Discover Card stopped offering all of its existing cards and replaced them with one card called the Discover it. This single card incorporates the best features of all the others Discover had offered, including cash-back rewards, bonus rewards on particular categories of spending, zero-percent APR promotional financing, and no annual fees.
“It” also features customer-friendly policies such as no late fee for the first late payment, no penalty interest rate, and 100-percent U.S.-based customer service.
Although the “it” card remains Discover’s only product, there are several different offers available.
The standard “it” card features 1-percent cash back on all purchases, plus an additional 4-percent cash back on up to $1,500 in eligible purchases each quarter from featured categories of merchants.
For example, eligible merchants during October, November, and December include department stores and all online shopping. The standard “it” card currently has an offer with 14 months of interest-free financing on both new purchases and balance transfers, with a 3-percent balance transfer fee, or an offer with six months of financing on new purchases and 18 months on balance transfers.
There’s also a newer version of the “it” card called the “it Chrome.” This version offers 1-percent cash back on all purchases, or 2-percent cash back on up to $1,000 in combined purchases at restaurants and gas stations every quarter. Like the standard “it” card, the Chrome version has the same two different promotional financing offers. Finally, there’s an “it” Chrome card for students.
Who should get these cards?
Those who are frustrated with their current credit card issuer for one reason or another should consider signing up for one of these cards. No, Discover won’t offer frequent-flier miles, hotel points, or access to the airport business lounge. Not everyone values those rewards. For those who appreciate a simple credit card with few fees and competitive rates of cash back, the Discover card makes as much sense now as it did back in the ’80s.