When choosing a new cash back credit card, it’s important to look carefully at each card’s terms and conditions, benefits and perks, and overall rewards structure to find the one that best matches your needs.
To help you get started, we compared two of the most popular cash back options — the Chase Freedom Unlimited® and the Discover it® Cash Back. While they have some similarities, there are major differences in the way you earn rewards as well as with other key card features. Learn more to decide which one is best for you.
Types of Cash Back Cards
Before you dive into the specifics on the Chase Freedom Unlimited® and the Discover it® Cash Back, it’s important to understand the way each card works.
Tiered Cash Back
The Chase Freedom Unlimited® is a tiered cash back card, meaning it automatically offers a set rate percentage of cash back in tiers. Certain categories earn a slightly higher rate, and then all other purchases earn a base rate.
“Tiered earning cards are usually easier to manage day to day,” says Steven Kibbel, certified financial planner and chief editorial advisor at Gold IRA Companies. “These cards don’t require you to track rotating categories and offer consistent rewards. This setup is ideal if your spending frequently falls into one or two specific categories.”
Rotating Cash Back
Discover it® Cash Back is a quarterly rotating cash back card, meaning that its top-earning categories change every quarter while all other spending earns a base rate. Cardholders have to activate the quarterly bonus category. “Rotating quarterly bonus categories can be highly rewarding if you’re someone who’s able to keep up with shifting categories every three months,” says Kibbel.
The downside? It requires some attention since you’ll need to activate each new category when it rotates. “Many people miss out on potential rewards simply because they do not track category changes or activation deadlines,” says Kevin Shahnazari, founder and CEO of FinlyWealth, a credit card recommendation platform. “It’s a simple system: You set calendar reminders for quarterly activations and keep a small note in your wallet to record the current bonus categories.”
[Read: Best Cash Back Credit Cards.]
Comparing Cards
Chase Freedom Unlimited® and the Discover it® Cash Back are certainly two of the most popular options with no annual fee. However, as noted, they do have different rewards and bonus structures, as well as unique benefits and perks. One way in which the cards are similar is they both have an introductory 0% annual percentage rate offer of 15 months on purchases and balance transfers.
Here’s a closer look at how the cards stack up.
Why Chase Freedom Unlimited® Might Be Best
The Chase Freedom Unlimited® has a number of attractive features for a no-annual-fee cash back card. Its base earning rate is 1.5% rather than the standard 1%, meaning you’ll get a higher-than-average rate on nonbonus spending.
It also has higher rewards on dining and drugstores and travel purchased through Chase Travel?, which can help you boost your earnings if those are personal high spending categories. The best part is that all rewards are unlimited, they never expire, and you don’t have to worry about remembering to activate offers.
“For people who prefer straightforward rewards without any category juggling, these tiered cards keep it simple,” says Kibbel.
Why Discover it® Cash Back Might Be Best
Discover it® Cash Back is for savvy shoppers who are willing to put in a bit of effort and be strategic about their card purchases. The 5% bonus category rotates each quarter, and you can earn up to $75 per quarter (or $300 per year) since bonus rewards are capped at $1,500 spent each quarter.
Though future quarterly categories may vary, the 2024 categories were:
— Q1: Restaurants and drugstores
— Q2: Gas stations, EV charging stations, home improvement stores and public transit
— Q3: Walmart and grocery stores
— Q4: Amazon.com and Target
The other major benefit of Discover is its Cashback Match bonus. While you will have to wait a year to reap those rewards, you have the potential to get a higher bonus than the capped $300 offered with the Chase Freedom Unlimited®.
Finally, if you’re someone who travels outside the United States, the Discover it® Cash Back does not charge a foreign transaction fee.
Who Should Get Chase Freedom Unlimited®
In general, Chase Freedom Unlimited® can be a great card for just about any wallet thanks to its 1.5% base rate, whether it’s used as a primary card or as a backup card. Plus, if you spend a fair amount dining out and at drugstores, the 3% rate is solid — and there’s no cap on earnings.
If the following statements describe you, then a Chase Freedom Unlimited® card is likely a good fit:
— You want an upfront cash bonus.
— You want simplicity.
— You will use the card as a backup to other rewards cards for its 1.5% rate.
— You are a DoorDash and/or Lyft customer who will use the partner benefits.
— You want consumer and travel protections.
[Read: Best Travel Rewards Credit Cards.]
Who Should Get Discover it® Cash Back
Discover it® Cash Back takes a bit more effort to maximize but can be good to have on hand when those quarterly bonus categories match your purchasing needs. “It’s worth it if you enjoy planning around the high cash back opportunities, but less appealing if you want something simple,” says Kibbel.
If the following statements describe you, then Discover it® Cash Back is likely a good fit:
— You can remember to activate your bonus categories.
— You’ll usually spend up to $500 per month in those bonus categories.
— You want to travel abroad with no foreign transaction fee.
— You plan to earn a lot of cash back to be matched in the first year.
Making the Case for Both Cards
Although you don’t necessarily want to apply for both cards at the same time
, there’s nothing wrong with adding a second cash back card to take advantage of different rewards, perks and benefits.
Shahnazari recommends pairing a tiered card with a rotating card. “Use a rotating card for your 5% categories and a tiered card as your backup,” he says. “The key is to match your regular spending to the right card at the right time.”
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Chase Freedom Unlimited vs. Discover it Cash Back originally appeared on usnews.com
