Selecting a credit card that best suits your needs can be tricky. There are so many options to choose from, but Discover it and Chase Freedom Unlimited are two cards that stand out from the pack if you’re looking for a rewards card with no annual fee.
Rewards: 5% cash back on rotating categories, 1% cash back on all other purchases
- 100% cash-back match for the first year (and cash back never expires)
- Zero fraud liability
- Free FICO score on monthly statements
- No over-limit fees
- Late fee waived on the first occurrence
- Enhanced security features (i.e. account freeze option that can be done directly from the website or your smartphone)
- No foreign transaction fee
- U.S.-based customer service
- Must activate categories to earn cash-back rewards
- 3% balance transfer fee
Bottom line: This card is great for individuals who want to earn a generous amount of cash back and don’t mind keeping up with rotating categories. It’s also a viable option if you’re looking to save on interest with a balance transfer.
Chase Freedom Unlimited
Rewards: 1.5% cash back (no maximum earning potential or minimum redemption amount and points never expire)
- Earn $150 when you spend $500 within the first three months of opening an account
- Earn $25 when you make a purchase of any amount and add an authorized user within the first three months of opening an account
- Flexible reward redemption options
- Zero fraud liability
- Cardholder purchase protections
- No penalty APR
- No over-limit fee
- 3% foreign transaction fee
- 5% balance transfer fee
- Better flat-rate cash-back programs
Bottom line: This card is great for individuals who want flexible cash-back earning and redemption options.
How Discover it and Chase Freedom Unlimited are similar
Both cards allow customers to earn cash back without paying an annual fee. Cardholders also enjoy a promotional APR on purchases and balance transfers. They also offer a generous cash-back bonus offer within the first year. And if you make a late payment, your interest rate won’t soar through the roof because neither card has a penalty APR.
The Discover it advantage
1. High cash-back earning potential
The Discover it card also has an enticing 5% cash-back rewards program. This is quite high compared to other credit card products on the market. Past categories have included restaurants, wholesale clubs, gas stations and Amazon.com. However, you must activate categories to take advantage or you’ll earn the standard 1%.
Also, your cash-back earnings will automatically double at the end of the first year.
2. Enhanced card security
Another major perk of the Discover it card is the account freeze option, which saves you the hassle of having to cancel the card and order a replacement. All you have to do is tap a button from your smartphone or freeze the card from your computer. And if you find it, follow the same steps to unfreeze and start using the card again.
3. Late payment forgiveness
If you make a late payment, you can relax because the $35 fee is waived for the first occurrence.
4. Ideal for foreign travel
Unlike the Chase Freedom Unlimited, cardholders are not subject to a foreign transaction fee.
The Chase Freedom Unlimited advantage
1. No rotating categories
Although Chase Freedom Unlimited only allows you to earn 1.5% cash back, it may be a better option for someone who doesn’t want to deal with rotating categories. Plus, you may also find that none of the rotating categories align with your spending patterns.
2. You don’t have to wait a year for your cash-back bonus
With Discover it, you have to wait until the end of the year to collect your cash-back match. But with this card, you can earn $150 cash back if you spend at least $500 in the first three months.
3. Cardholders benefit from adding an authorized user
Earn an additional $25 simply by adding an authorized user and making a purchase of any amount in the same three-month window.
Which card is the best option?
While the Chase Freedom Unlimited has a fairly straightforward rewards system, the Discover it card has a slight competitive edge. If you’re willing to keep up with the rotating categories, you can rack up the points and cash in at the end of the year. And even if you choose not to, you still have the option to earn 1% cash back on every dollar spent. The Discover it is also a better card if you travel frequently as there is no foreign transaction fee.
Allison Martin is an accomplished finance writer who has written for publications including The Wall Street Journal, MoneyTalksNews, The Simple Dollar, and Credit.com. Her work has been featured on Fox Business, Yahoo! Finance, MSN Money, and ABC News. She enjoys writing about personal development, entrepreneurship, personal finance and is a Certified Financial Education Instructor (CFEI).