Discover it® chrome Credit Card Review: Should You Get It?

Discover it® chrome Credit Card Review: Should You Get It?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

Citi is an advertising partner.

The Discover it® chrome is an entry-level cash back option for consumers with low and limited spending to consider. The card lets cardholders earn 2% cash back on spending at gas stations and restaurants (capped at a total $1,000 each quarter). This translates to up to $20 in savings each quarter – a low amount by cash back card standards. This card is ultimately unimpressive when matched against some of the best cash back credit cards available. It may be worth considering, as mentioned above, by consumers looking for their first credit card, who have low spending habits.

Pros

  • Ability to redeem cashback any time
  • Relatively easier to get approved for

Cons

  • Low cashback rate with few bonus categories
  • $20 cap on bonus savings each quarter

Review: Is the Discover it® chrome a Good Credit Card?

The limited bonus categories and rewards cap prevent the Discover it® chrome from being a good value for most consumers. When compared to a card like the Citi® Double Cash Card – 18 month BT offer, which offers uncapped cashback across all net spending and categories, the Discover it® chrome is a hard card to recommend to anyone. There is a very thin window of criteria one must fit, in order for the Discover it® chrome to be considered worth applying for. Firstly, capping the bonus category spending at $1,000 per quarter at gas stations and restaurants allows for maximum rewards for somebody who spends no more than $333 per month on gas and restaurants. However, if a consumer has greater spending in other categories, this card earns you significantly less than other cash back credit cards.

A perk of the Discover it® chrome is that it allows users to redeem their savings at any point, thanks to a partnership with Amazon.com. This feature is not something seen in many other cashback credit cards, which simply apply rewards to your statement at the end of each month. This may prove useful to consumers who need extra cash for a purchase, but don’t want to or can’t charge it to their credit card. Note that this is not exclusive to the Discover it® chrome. All Discover it® credit cards, including the student variants, have this ability. Therefore, this should not by any means serve as a major deciding factor for getting this card.

Accidents happen, and it is possible that you may forget to pay your credit card bill on time. Luckily, for Discover it® chrome users, the first time you are late on your payment Discover will not charge a fee. This feature is especially useful for first time credit card users, who may be prone to a slip up like this. If you happen to forget a payment, you may be interested in knowing how it affected your credit score. Discover offers its customers free credit reports online and on monthly statements. This allows Discover it® chrome cardholders to monitor their FICO® score and certainly is one of the card’s better benefits.

What are the Benefits and Features of the Discover it® chrome?

We'll cover three features below: the bonus categories, the FICO reports, and the absence of foreign transaction fees.

The Discover it® chrome offers cardholders 2% cash back on all purchases at gas stations and restaurants. This applies to combined purchases of up to $1,000 each quarter, or every 3 months. After that limit is reached, the Discover it® chrome gives users just 1% cash back on refueling at gas stations or dining out at restaurants – just like the rate for all other categories. The combined $1,000 in purchases applies to both gas stations and restaurants, in total. This does not mean you get $1,000 for each category, but rather the total for both must not exceed the set amount.

As stated previously, your bonus spending category rewards will not, therefore, exceed $20 in total rewards. We obtained this value as follows: assuming you make $1,000 in purchases just at gas stations, you will receive a 2% cash back reward on those purchases. 2% of $1,000 = 0.02 x $1,000 = $20.

Therefore, the 2% cash back is the best case scenario. What happens if you don’t only spend on your bonus category? Say that, for a particular 3 month period, only a quarter of your purchases were at the gas pump or inside dining establishments. Assuming your total spending was $1,000 (this amount can be substituted for your usual spending), you would have gotten 2% cash back on $250, and 1% cash back on the other $750.

  • $250 on gas or restaurants x 0.02 = $5.00
  • $750 on everything else x 0.01 = $7.50
  • $5.00 + $7.50 = $12.50 in total rewards
  • $12.50/$1,000 = 1.25% rewards rate

Therefore, if Discover it® chrome cardholders are spending a quarter of their budget in the bonus categories, they'll receive an effective rewards rate of $1.25%. Once bonus category spending crosses over the $1,000 threshold each quarter, your total rewards rate begins to slowly average out to 1%, the more you spend. Below we show your effective rewards rate across spending, if 25% or 50% of your spending happens in bonus categories.

This graph illustrates how users' rewards rate change based on how much of their spending is in the bonus categories, and across different levels of expenditure

As you can see, the higher the initial rewards rate, the sooner you start to see a drop as your spending goes up. However, in the long term, over rewards rates of a certain level always fall at the same inflection point. Meaning that, no matter at what rewards rate you start, once you reach a certain rewards rate the value of your returns will be the same. Therefore, you always want to always make your bonus spending a bigger percentage of your total spending, in order to maximize rewards with this card.

Discover it® chrome cardholders can check their FICO score at any point by logging in online or by looking at their monthly statement. This feature really benefits anybody who is looking to build their credit, and is another reason why this is a good option to consider for first-time cardholders. Monitoring one's credit score regularly can give you an idea of how your spending and payments affect your standing in the eyes of cardholders.

Additionally, any credit card purchases made internationally (or even on a website that is domiciled overseas), won't get charged a foreign exchange fee on the Discover it® chrome. While this is a good feature in any credit card, Discover is not widely accepted internationally. If you plan on using a credit card abroad, Visa or Mastercard might be better options to consider.

At the end of the first cardmember year, Discover will double all the cash back you've earned for new cardmembers. That means, for the first year, you can earn up to $120 back from spending in the 2% category, plus an unlimited effective rate of 2% on all other purchases (doubled cash back from all the 1% spending).

How Can I Redeem Discover it® chrome Rewards?

One of the more unique features of the Discover it® chrome resides in its redemption options. Just like most other cashback credit cards, you may choose to wait and have your rewards be applied to your statement at the end of each billing cycle. If, however, you wish to take advantage of your extra cash at any point in between your monthly statements, you have the option to do so via Amazon.com. This should be a useful perk for cardholders, since Amazon.com is a major online retailer and destination for online shopping. There are no penalties for using your rewards in this way. For every $1 earned in rewards for using the Discover it® chrome you can spend $1 on any Amazon.com item.

How Does the Discover it® chrome Compare to Other Credit Cards?

Below we offer a comparison between the Discover it® chrome and some other options which fit users who may be interested in this card. All these cards follow the same theme of giving users cashback, and have a varying levels of value they can provide the consumer. We ultimately found that when compared to most cashback credit cards, the Discover it® chrome underperformed and was generally the card that offered the least overall value. Below is our interactive credit card comparison tool, which allows users to enter how much they think they'll spend each month, and see how each credit card alternative stacks up in terms of rewards and other metrics.

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Discover it® chrome vs Discover it® Cash Back

The standard Discover it® Cash Back offers consumers more value, if they are willing to put in a little bit of work. The Discover it® Cash Back card lets users sign up each quarter to get 5% cash back on different spending categories, up to a maximum of $1,500 in purchases. For 2020, the categories include grocery stores, Walgreens and CVS (January-March), gas stations, Uber, Lyft and wholesale clubs (April-June), restaurants and PayPal (July-September), Amazon.com, Target and Walmart.com (October-December). All categories, outside of the bonus category for that season, offer only 1% cash back. As long as a cardholder makes sure to keep track of the rotating categories, there is potential for greater savings with the Discover it® Cash Back card over the Discover it® chrome or other cash back credit cards.

The caps on bonus rewards are also higher – Discover it® Cash Back cardholders can receive rewards for up to $1,500 in combined spending. At a rewards rate of 5%, that is a bonus value of $75 each quarter.

By applying just 25% of their spending on bonus categories, Discover it® Cash Back cardholders can effectively match the maximum possible rewards rate of the Discover it® chrome. Any more spending than that, and you will get more value than the Discover it® chrome can hope to provide.

Discover it® chrome vs Discover it® Student Cash Back

The Discover it® Student Cash Back works similarly to the non-student version. Cardholders earn 5% cash back cash back in categories that change each quarter, up to a quarterly maximum each time you activate. For 2020, the categories include grocery stores, Walgreens and CVS (January-March), gas stations, Uber, Lyft and wholesale clubs (April-June), restaurants and PayPal (July-September), Amazon.com, Target and Walmart.com (October-December).

Note that in order to qualify for the Discover it® Student Cash Back card, you must be currently attending a 4-year college or university. Individuals who were attending community college at the time of their application reported being denied this card for that reason.

Discover it® chrome vs Chase Freedom®

Chase Freedom®
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The Chase Freedom® is another starter cashback credit card alternative which can be applied for with limited credit history. This card lets you Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases. This is very similar to the Discover it® Cash Back card. However, Chase Freedom® customers can receive a signing bonus – a feature missing from the Discover it® chrome. After spending $500 within the first 3 months of receiving the card, consumers can get a bonus $150. Small things like this really add up to increase the initial rewards rate of a card, giving you more value for each dollar you spend with it, within those first 3 months.

One more advantage of the Chase Freedom® over the Discover it® chrome is in the bonus cap. The 5% bonus is given a $1,500 limit - $500 more than the Discover it® chrome. This lets consumers extract more value from a card like the Chase Freedom®, and should be considered a major plus of choosing it over the Discover it® chrome card.

Discover it® chrome vs Citi® Double Cash Card – 18 month BT offer

  • On Citibank's Secure Website
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The Citi® Double Cash Card – 18 month BT offer is one of the best cashback cards, and is without a doubt much more desirable than the Discover it® chrome. The Citi® Double Cash Card – 18 month BT offer lets you Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. It’s as simple as that. The card has no special categories, and there is no maximization to be done. By using this card, you will always get a better value than you would with the Discover it® chrome by virtue of the extra percentage point on all spending.

What’s the catch? The Citi® Double Cash Card – 18 month BT offer is harder to get. Citibank will typically require excellent credit in order to approve applicants for this credit card. Therefore, if you are just starting out your credit card adventure you should consider the path of other cards such as the Chase Freedom® or the Discover it® chrome.

Bottom Line: Is the Discover it® chrome Worth Getting?

The simplest answer to the above question is: no. As long as you put minimal effort in, and have some of your spending fall into bonus categories there is no reason to ever choose the Discover it® chrome over the 5% standard Discover it® Cash Back card. Even if your spending habits are on the lower side of things, having the added 5% rotating categories gives you the potential to earn more in the future, making it a more worthwhile endeavor. Those feeling adventurous, and wishing to discover options from other financial institutions, can look to cards such as the Chase Freedom®.

The information related to the Chase Freedom® has been independently collected by ValuePenguin and has not been reviewed or provided by the issuer of this card prior to publication.

Joe Resendiz

Joe Resendiz is a former investment banking analyst for Goldman Sachs, where he covered public sector and infrastructure financing. During his time on Wall Street, Joe worked closely with the debt capital markets team, which allowed him to gain unique insights into the credit market. Joe is currently a research analyst who covers credit cards and the payments industry. He earned a bachelor’s degree from the University of Texas at Austin, where he majored in finance.

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How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates here are ValuePenguin's alone, not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).