Chase Freedom vs. Citi Dividend vs. Discover it

January 18, 2013

For someone who is looking to maximize their credit card rewards, the word “bonus” can leap right off the screen. Just about any decent reward card will earn 1% cash back, but it is the opportunity to earn a 5x bonus that can really attract your attention.

Chase, Citi, and Discover are three of the major credit card issuers that offer very similar cards featuring bonus categories of spending that change each quarter. The broad outlines of these offers are nearly identical, but if you look closely, their details vary widely.

Let’s put these three in the ring and see who wins the fight.

Chase Freedom

Chase Freedom

As one of the most popular reward cards, the Chase Freedom has set the standard among cards with rotating bonus categories. Cardholders start with $100 cash back after spending $500 within three months of opening an account. Then, you will earn 1% cash back on most purchases and 5% back on the first $1,500 spent each quarter on eligible bonus categories and merchants. For example, in October, November, and December of 2012, the bonus categories are for charges from airlines and hotels as well as retailers Best Buy and Kohl’s.

But this Chase card also has a couple of other neat tricks up its sleeve. It is a little known feature that cardholders who also hold a Chase checking account will earn a 10% points bonus and an additional 10 points per transaction. That means that a $1 purchase will earn 12 points; 1 for the purchase, 1 for the 10% bonus, and another 10 points.

In addition, cardholders are also eligible to participate in Chase’s innovative Blueprint program. This no-cost benefit allows cardholders to pay some charges in full while carrying a balance on others. It also includes powerful budgeting and goal setting tools. There is no annual fee for this card, but there is a 3% foreign transaction fee on all purchases that are processed outside of the United States.

Citi® Dividend Platinum Select® Visa® Card – $100 Cash Back

Citi Dividend Platinum SelectCiti® Dividend Platinum Select® Visa® Card – $100 Cash Back card one-ups Chase by offering $100 cash back after $500 in purchases within the first 3 months of account opening. It features the same standard 1% cash back on most purchases, and 5% back on purchases from bonus categories.

The card features bonus categories each quarter so be sure to check out the current bonus rewards. Cardholders also receive several valuable travel insurance and purchase protection policies including travel accident insurance, lost luggage coverage, retail purchase protection, and price protection. There is no annual fee for this card, but again, there is a 3% foreign transaction fee whenever the card is used on the other side of the border.

Discover it

Discover itDiscover recently replaced it entire line of reward cards with their new product, Discover it®, which is similar to the former Discover More card. The Discover it® card is still very similar to both the Chase Freedom and Citi Dividend cards, except there is no opportunity to earn a sign up bonus. Discover it® offers 1% cash back on most purchases and 5% cash back on eligible transactions in bonus categories that change every three months. Thankfully, this new product removed much of the the fine print that hurt the More card. The old More had some annual spending limitations that this new product does not.

You can see the latest bonus categories on the Discover site. There is no annual fee for this card, and there are no foreign transaction fees on any Discover products. Unfortunately, the Discover card is less widely accepted than the Visa cards from Chase and Citi, especially overseas.

Conclusions

The Chase Freedom card appears to be the winner for most cardholders. While it offers a smaller sign up bonus than the Citi card, and fewer benefits, there is no overall limit on annual rewards. Furthermore, those with a Chase checking account who can take advantage of the additional bonus points can dramatically increase their cash back.

On the other hand, the Citi® Dividend Platinum Select® Visa® Card – $100 Cash Back provides superior purchase protection and travel insurance policies. Despite the improvements over the More card, the Discover it® card is still the weakest product of the bunch, if only because “it” offers no sign-up bonus.

Other Important Considerations

As with all reward cards, these products should only be used by those who always pay their balances in full and on time. Those who carry a balance should find the card with the lowest interest rate and not worry about rewards. Also, cardholders should be careful not to be too mindful of the rewards, especially the bonus categories. The last thing any cardholder should do is to spend more money in order to earn a reward.

Certainly it would be better to make a purchase in a bonus category the day before it expires than the day after, but rewards should never induce you to spend more that you would have. Finally, a quirk of each of these programs is that cardholders much remember to register for their bonus categories each quarter. Fortunately, the registration can occur anytime during the quarter and is retroactive to the beginning.

Which card is your favorite? Leave a comment and let us know!

Due to the changing rates, terms, and bonuses of cards we cannot ensure the accuracy of the card information. Please double check card data and rates when you apply. Also note that if you apply and are approved for some of these cards through these links, this site may receive some compensation.

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Jason

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Jason
Jason Steele has been dissecting credit card bonuses and loyalty travel programs for years. Digging into the details of credit card offers has enabled his family to vacation in cool places around the world. Pay attention to the details he digs up about which card is best for you.

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2 Responses to Chase Freedom vs. Citi Dividend vs. Discover it

  • Sara

    I have the Chase Freedom card. I also have a Fidelity investment rewards American Express that gives me 2% cash back into my Fidelity account. I use the Chase Freedom on the 5% categories and the Fidelity card to get 2% on everything else (unless they don’t take AmEx).

    One trick I use to get more out of the 5% cash back categories is buying gift cards. This quarter, Chase Freedom has 5% cash back at drug stores, so I’m buying Amazon.com gift cards from CVS (which also gives a 2% rebate if you have an Extra Care card). Obviously, don’t buy more gift cards than you can afford to pay for when you get your credit card bill, and don’t buy gift cards to places where you wouldn’t normally shop, but this is a good way to maximize your cash back.

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