Discover cards offer Cashback Bonus, purchase protection and convenience, all backed by highly ranked customer service and no annual fee (for most cards). However, these cards also come with their share of drawbacks that you’ll need to consider when deciding whether signing up for a Discover card is right for you.
Rewards: Discover was the first company to offer cash back rewards to its customers, and today, most of its cards have a cash back program. You can redeem these rewards by getting a direct deposit of money in your bank account, taking a credit on your Discover Card account, or purchasing gift cards online. Participating retailers make store gift cards available through the Discover website that cardholders can purchase with the points they’ve accumulated from using their Discover card. When used this way, points can be worth more than their statement credit value. For instance, you can buy $50 gift cards for the equivalent of $40 in points from some stores.
Member benefits: If an eligible item you purchased goes on sale within 90 days of when you bought it, you’ll be refunded the price difference. Discover will also guarantee returns on eligible items of up to $500 within 90 days of purchase, regardless of store policy. In addition, most purchases made on Discover cards are eligible for one additional year of warranty coverage beyond what a manufacturer’s protection plan provides. Damages to Discover card purchases on eligible items that are lost or stolen are covered up to $500 for 90 days.
Customer service: Discover offers 24/7 customer service via the phone, and all representatives are U.S. based. The company has a reputation for customer service.
Cash over benefit: Discover is the only major credit card issuer to offer the cash over benefit. This option allows you to get cash back when using your card at certain retailers, saving you a trip to the bank or ATM.
Rewards: The downside of Discover’s reward structure is you need to stay on top of it. Many Discover cards offer 5% cash back bonus on purchases in certain categories. The categories (such as restaurants or gas purchases) eligible for 5% cash back change every few months. When some categories are not eligible for the highest rewards, other credit cards may be offering larger cash back percentages at the same time. This means that if you don’t spend a lot in the high-reward categories, you may be losing out on the rewards you could be getting with another card. Check Discover’s calendar to see if your purchases would generally fall in line with its reward program.
Acceptance: Where is Discover Card accepted? Discover card’s acceptance at retailers has been greatly improved of late. By some estimates, over 90% of stores in the U.S. that accept Visa and MasterCard now accept Discover, as well. Even so, having a Discover card as your only credit card may mean you are unable to make non-cash purchases at some stores.
Approval: Some Discover credit cards require a credit score above 700 for approval, and even cards that are easier to get require scores well into the "good" credit score range.
Given the positives and negatives, Discover cards are probably best for individuals who have good credit and who are open to having more than one credit card. Discover’s reward structure is great when its 5% cash back program applies to products you are likely to buy, but at times, you’ll find you’re better off taking advantage of rewards offered by other credit cards. You’re also less likely to get stuck at a store being unable to make a purchase if you have at least one other card that’s more widely accepted.
To decide whether a Discover card is right for you, evaluate your spending patterns and credit needs, and then compare Discover’s card offerings to its competitors.