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Discover it Cash Back vs. Chase Freedom: Which is the better 5% cash-back card?

The Discover it Cash Back and Chase Freedom are two of the most popular 5% cash-back cards. Here's a side-by-side comparison of the card offerings.

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The Chase Freedom® is not currently available to new cardholders. Please visit our list of the best cash-back cards for alternative options.

Discover and Chase are the two most popular card issuers offering 5% cash-back cards, which gives savvy spenders opportunity to maximize their earnings in rotating categories.

If the cards' bonus categories match up with your spending, it can be smart to take advantage of these cards. The rewards you earn during those periods could outweigh what you'd receive using a flat-rate card that only earns 1% to 2% cash back year-round.

But which 5% cash-back card should you choose: Discover it® Cash Back or Chase Freedom®?

Below, Select reviews both cards to help you choose the one that provides the most benefit for your spending habits.

Annual fee

There is no annual fee for either the Discover it Cash Back or Chase Freedom.

While both cards have no annual fee, the introductory 0% APR for each card lasts for different periods of time.

The Discover it Cash Back offers a 0% intro APR for the first 14 months on new purchases (after, 11.99% to 22.99% variable APR), while the Chase Freedom offers a competitive 0% APR for the first 15 months on new purchases (after, 14.99% to 23.74% variable APR).

The Chase Freedom charges a 3% fee on foreign transactions, whereas the Discover it Cash Back has no foreign transaction fees. The Discover it Cash Back also automatically waives your first late payment fee.

Winner: It depends on what you're looking for. Though the Chase Freedom has a longer 0% intro interest period on new purchases, you can get dinged on the foreign transactions fees. Customers with the Discover it Cash Back avoid those foreign transaction fees and also benefit from no late payment fee the first time you miss a bill, then up to $40.

Welcome bonus

Both cards come with strong welcome bonus offers:

  • Discover it Cash Back: For new card members in their first year only, Discover will automatically matches all the cash back they've earned at the end of their first year. There is no limit to how much Discover will match.
  • Chase Freedom: Earn $200 cash back after you spend $500 on purchases in your first three months from opening an account. (That's like earning 40% back.)

Winner: Discover it Cash Back, since there is no minimum spending requirement for the welcome bonus.

Rewards

Both the Discover it Cash Back and Chase Freedom credit cards provide, upon activation each quarter, 5% cash back on eligible purchases in rotating categories on up to a $1,500 quarterly maximum (then 1%). Cardholders must enroll each quarter to activate bonus categories at the select merchants. Both Chase and Discover allow you to save activation reminders to your calendar and set up email alerts to help you remember to enroll.

After you reach the $1,500 spending limit, you get 1% back on all other purchases. If you maximize your spending in these bonus categories, you could earn $75 cash back each quarter on top of the unlimited 1% cash back you automatically earn in all the other categories.

Since the reward rate for each card is the same, the bonus categories offered may help you choose which card to sign up for. Discover released its full 2021 cash-back calendar in late December 2020, allowing cardholders to plan their spending months in advance. But Chase typically announces their bonus cash-back categories by quarter with the remaining categories released throughout the year.

Here's the Discover cash-back calendar for 2021:

  • January to March (activation closed): Grocery stores (includes Walmart® grocery pickup and delivery purchases; excludes other Walmart and all Target® purchases), Walgreens and CVS
  • April to June (activation closed): Gas stations, wholesale clubs and select streaming services
  • July to September (activate now): Restaurants and PayPal
  • October to December (activate starting Aug. 1, 2021): Amazon.com, Target.com and Walmart.com

Here's the Chase Freedom cash-back calendar for 2021:

  • January to March (activation closed): Wholesale clubs*, cable, internet, phone services and select streaming services**
  • April to June (activation closed): Gas stations and home improvement stores
  • July to September (activate now): Grocery stores (excluding Target and Walmart) and select streaming services**
  • October to December (activate starting Sept. 15, 2021): Walmart and Paypal (Qualifying purchases made using PayPal at Walmart will only earn a total of 5%)

*The Chase Freedom Flex℠ is a Mastercard, which is only accepted online at Costco.com, not in-warehouse. Learn more about what credit cards Costco accepts.

**Eligible streaming services include: Disney+, Hulu, ESPN+, Netflix, Sling, Vudu, Fubo TV, Apple Music, SiriusXM, Pandora, Spotify and YouTube TV.

Select worked with the location intelligence firm Esri, who provided us with a sample annual spending budget of $22,126. We used this sample budget to break down how much money you could earn (less than annual fee) if you optimized using each card over the course of five years. Calculations also assume you take full advantage of the welcome bonus.

The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953).

We found you could earn an estimated $2,120 over five years with the Discover it Cash Back versus $1,894 with the Chase Freedom.

While the five-year estimates we've included are derived from a budget similar to the average American's spending, you may earn a higher or lower return depending on your consumer habits.

Winner: Discover it Cash Back, since you earn $226 more in rewards over the course of five years and you know the card's bonus categories ahead of time.

Redemption

Rewards earned on these two cards can be redeemed in similar ways. There is no minimum to redeem cash back for either card and, as long as your account is open, the rewards don't expire.

For Discover, you can redeem your rewards at any time for statement credits, gift cards, merchandise and more. For Chase, your rewards can also be transferred to a Chase Ultimate Rewards® card, such as the Chase Sapphire Preferred® Card, which allows you to redeem rewards for travel through the Ultimate Rewards portal and receive 25% more value.

Winner: Chase Freedom, since travel redemption made via Chase Ultimate Rewards can receive 25% or 50% more value if you also have a Chase Sapphire Preferred Card or Chase Sapphire Reserve®.

Added perks

Chase recently rolled out added benefits, so Chase Freedom cardholders can take advantage of 5% cash back on Lyft purchases through March 2022, making this a competitive card for anyone who frequently takes rideshares. The Chase Freedom also offers a three-month complimentary DashPass membership, then a 50% discount for the next nine months, through DoorDash.

While Discover it Cash Back offers identity alerts to its cardholders at no cost, Chase Freedom cardholders can benefit from purchase protection and extended warranty protection.

Winner: Chase Freedom, if you are someone who would take advantage of Lyft rides and food delivery through DoorDash.

Bottom line

The Discover it Cash Back and Chase Freedom are two of the best 5% cash-back credit cards to have in your wallet. Since both cards have no annual fee, the card that's best for you depends on how you spend your money and the bonus categories you would like to maximize.

If you like to plan your spending months in advance, the Discover it Cash Back is the better choice as Discover releases its full cash-back calendar for the year, whereas Chase only announces Chase Freedom's bonus cash-back categories by quarter.

While some bonus categories have overlapped this year and last, such as gas stations and grocery stores, Discover includes restaurants while Chase has not yet.

If you don't plan your spending ahead of time but ride Lyft often, the Chase Freedom could be the better choice with their 5% cash-back partnership. Plus, you can take advantage of transferring points to other Chase Ultimate Rewards cards and receive up to 50% more value on travel redemption.

At the end of the day, the best cash-back card for you is the one that fits your spending habits and allows you to maximize desired rewards.

While both of these cards are good options for a lot of cash back without paying an annual fee, there are alternative options that may be a better fit for your needs. Check out Select's roundup of the best cash-back credit cards for online shopping, food and groceries.

For those looking to spend outside the bonus categories, we recommend using an alternative cash-back or rewards credit card so you earn at least 2% or 2 points per dollar spent.

If you want to optimize the amount of cash back you can earn with either the Discover it Cash Back or Chase Freedom, the Citi® Double Cash Card ranks as our No.1 cash-back card with no annual fee and earns cardholders an effective 2% cash back: 1% when you buy and 1% when you pay for purchases.

Discover it® Cash Back

On Discover's secure site
  • Rewards

    Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate.

  • Welcome bonus

    Dollar-for-dollar match of all cash back earned the first year

  • Annual fee

    $0

  • Intro APR

    0% for 14 months on purchases

  • Regular APR

    11.99% - 22.99% Variable

  • Balance transfer fee

    3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*

  • Foreign transaction fee

    None

  • Credit needed

    Good / Excellent

*See rates and fees, terms apply.

 

Chase Freedom®

Information about the Chase Freedom® has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.
  • Rewards

    5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate (then 1%), 1% cash back on all other purchases

  • Welcome bonus

    $200 cash back after you spend $500 on purchases in your first 3 months from account opening

  • Annual fee

    $0

  • Intro APR

    0% for the first 15 months on purchases

  • Regular APR

    14.99% to 23.74% variable on purchases

  • Balance transfer fee

    Either $5 or 5% of the amount of each transfer, whichever is greater

  • Foreign transaction fee

    3%

  • Credit needed

    Excellent/Good

Terms apply.

 

For rates and fees of the Discover it® Cash Back, click here.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.