Learn about credit cards: pros and cons


When you think of credit cards, chances are the first names that come to mind are the Big Three: Visa, Mastercard and American Express. But so many different financial companies offer credit card services that consumers are no longer limited to these three alone. While the Discover the credit card may not be as familiar as others, it offers cardholders some of the same perks and benefits as its counterparts, plus a few of its own.

Key points to remember

  • The Discover Card is the seventh largest credit card issuer in the world.
  • Discover was an innovator when it launched in 1986, with its no-annual-fee and cash-back rewards program.
  • Discover now offers eight major credit cards; terms and features vary.
  • While its competitors have aped many of its innovations, Discover ranks among the top credit card companies for customer service and satisfaction.

Discover Card History

Dean Witter Financial services Group Inc., a subsidiary company of Sears, Roebuck, and Co., developed the Discover card in the early 1980s. Testing of the card began in 1985 – the very first purchase was made by a Sears employee in Chicago at a Sears store in Atlanta – and there were also marketing tests in Atlanta and San Diego. A year later, in 1986, the Discover card was officially launched, introduced in a national advertising campaign during Super Bowl XX.

the credit card The market was roaring at the time, with cards coming out at breakneck speed, but Discover was looking to set itself apart in several ways. It charged no annual fee, which was somewhat uncommon at the time (at least, for general purpose credit cards). Another of its advantages, which was also a major innovation at the time, was its cash back rewards: the return of a small percentage of the purchase amount in cash to the user’s account.

Although the cash back feature is attractive to consumers, Discover has slowly caught on with merchants; at first, only major airlines and car rental companies – and of course, major retailers like Sears – accepted it. But it gradually gained popularity. In the mid-2000s, agreements with foreign payment networks, such as Japan’s JCB and China’s UnionPay, dramatically increased its use overseas. As of 2021, Discover is the seventh largest credit card issuer in the world with over 57 million cardholders.

Unlike Visa and Mastercard, which are issued by banks, Discover is its own issuer and network (similar to American Express). The card is issued by Discover Bank, a subsidiary of Discover Financial Services. Discover Bank was created after a series of acquisitions and reorganizations. Accompanied by his credit card offerings, Discover Bank now operates as an online bank offering many traditional financial services, including verification and savings accounts, certificates of deposit, bill payment and more. It also offers consumers access to cash with 60,000 toll-free ATMs across the United States.

What does the Discover card offer?

The Discover “it” card, as the company’s card was branded in 2013, comes in eight basic varieties, including:

  • The flagship Cash Back card
  • Chromium Student
  • Cash back for students
  • To travel
  • Secured
  • Petrol & Restoration
  • Business
  • NHL

True to its roots, the card still has no annual fee, nor does it charge its customers a foreign transaction fees. Discover will also not charge a late fee for the first missed or late payment. Each of your monthly statements also comes with a FICO score. As with all credit cards, you are not responsible for fraudulent transactions.

Features vary by card. The flagship Discover Cash Back card offers 5% cash back on select categories that change throughout the year. Discover also promises to match the full cashback at the end of the year for the first year. Flagship Cash Back, Gas & Restaurants and NHL cards have an introductory 0% annual percentage rate of charge (APR) for purchases and balance transfers for the first 14 months. The initial 0% APR for student cards is six months and applies to purchases only.

Customer service is also a strength for the company. JD Power ranked Discover second in overall customer satisfaction, behind American Express, in its 2020 U.S. Credit Card Satisfaction Study, followed by Bank of America, Chase and Capital One. Discover advertises that its customer service representatives are all based in the United States.

Discover the rewards of the card

Rewards for Discover credit cards vary by card. For example, you can earn 5% cash back with the Cash Back card, on categories that change quarterly, such as gas, groceries, and Amazon.com. You also earn 1% cash back on all other purchases. Cash back does not expire and can be redeemed to your bank account, used as credit towards your Discover Card balance, or used during checkout at Amazon.com or Paypal.

The Student Cash Back and Student Chrome cards offer 5% and 2% cash back, respectively, plus a $20 statement credit for achieving a GPA of 3.0 or higher for the year, up to at five years old. Discover will also match the cash back rewards you earn in the first 12 months you have your card on the Cash Back, Student and Student Chrome, and Secured card.

In the case of the Travel card, you’ll earn 1.5 miles for every dollar spent, and all your miles in the first year of card ownership will be matched mile for mile. The Business card offers 1.5% cash back on all purchases, with no cap on how much you spend. With the NHL Card, in addition to earning money, you’ll save 10% when you shop at NHLShop.com and also get a discount on an NHLTV subscription if you pay for it with your card.

Discover the APR card

As with all credit cards, the attractiveness of Discover card terms depends on your credit score. For non-student cards, those with limit credit might see an APR of 22.99%, but customers with stellar credit scores might be offered a rate of 11.99%. Student cards have an introductory APR of 0% for the first six months on purchases, then range from 12.99% to 21.99%. The APR for cash advances is 24.99% for all cards; you pay $10 or 5% of the amount, whichever is greater, as a fee.

Transfer balance may come with an introductory APR rate of 0%, but you’ll pay a 3% fee for each transfer, a standard fee among most credit cards.

Although other cards have jumped on the bandwagon, the Discover it card’s 5% cash back remains one of the most generous, as does the company’s matching policy. However, unlike some other cards, you must follow the eligible categories for each quarter. There’s also a cap on how much you can spend while still earning rewards, currently $1,500 per quarter. All other purchases earn you 1%.

The essential

Discover came to market in 1986 as a more user-friendly map. Today, the cards retain these features, but the benefits that set the brand apart years ago are now quite common in the industry. Carefully read the conditions of each of its cards before applying. Two cards may look similar but have very different terms. For example, there are 1.5% to 2% cash back cards (Business, Gas & Restaurants, Secured, Student Chrome), in addition to those that offer 5%. If you receive an offer in the mail, compare it to what is listed on the Discover website.

Finally, if you regularly hold a balance, the rewards may not outweigh the interest payments, especially if you end up with one of the higher interest rates.


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