Visa and Mastercard are the two largest credit card companies in the world, so it's no surprise that these two names come to most people's minds when they think about credit cards. American Express is third, and Discover comes in fourth.
Although Discover may not be as big a name as the other three, it does provide cardholders with some of the same perks and benefits as its counterparts—plus a few of its own. Keep reading to learn more about Discover and how it works.
Key Takeaways
- Although the credit card network industry is dominated by Visa and Mastercard, smaller players like Discover share a piece of the pie.
- Discover launched its credit card with cashback rewards and no annual fees in 1986.
- Its cashback rewards remain among the highest in the industry.
- The company offers eight major credit cards today, each of which carries different terms and rates.
- Discover has consistently ranked high in customer service and satisfaction among credit card companies.
History of Discover Card
The Discovery card was developed and tested in the mid-1980s by Dean Witter Financial Services Group, a subsidiary of Sears. It was introduced to consumers in a national ad campaign during Super Bowl XX in 1986 and was officially rolled out that same year.
One of the main goals of the Discover card was to set itself apart from the competition at a time when the market became saturated with credit cards. Cardholders enjoyed an option with no annual fee, which was a rarity at the time.
Discover also offered cardholders an innovative new perk: cashback rewards or the promise of returning a small percentage of every purchase amount in cash money on their accounts.
Discover's cashback perks may have attracted consumers but it didn't catch on with merchants at first. In fact, only major airlines, rental-car companies, and big retailers like Sears accepted the card.
In the mid-2000s, agreements with foreign payment networks, like Japan's JCB and China's UnionPay, greatly increased its usage abroad. As of 2024, the company payments network is used by over 305 million global cardholders.
The company is a little different from network powerhouses Visa and Mastercard in that it doesn't use banks or financial institutions to issue its products. Just like American Express, Discover is its own issuer and network. Cards are issued through Discover Bank, a subsidiary of Discover Financial Services that was formed after a series of acquisitions and reorganizations.
What Does Discover Card Offer?
The Discover “it” card, as it was branded in 2013, comes in seven basic varieties, which are:
- The flagship Cash Back card
- Student Cash Back
- Student Chrome
- Miles
- Secured
- Chrome Gas & Restaurants
- NHL
Staying true to its roots, the card still has no annual fee and doesn't charge foreign transaction fees. Discover won't charge a late fee for the firstmissed or late payment, either. Each of your monthly statements also comes with a free FICO score. As with all credit cards, you are not responsible for fraudulent transactions.
Features vary, depending on the card. The flagship Discover Cash Back card offers cashback rewards of 5% for certain categories that change throughout the year. It also promises to match all of the cashback at the end of the year for the first year.
Flagship Cash Back, Student Cash Back, Student Chrome Chrome Gas & Restaurants, Miles, and NHL cards have an introductory 0% annual percentage rate(APR) for purchases or balance transfers, or both for a specified period of months, depending on the card.
Customer service is a strength for the company, too. Discover advertises that its customer service representatives can be reached at any time by phone or online.
J.D. Power ranked Discoverthird in overall customer satisfaction, behind Bank of America and American Express, in its 2023 U.S. Credit Card Satisfaction Study.
Discover Bank now functions like an online bank, providing traditional financial services in addition to its credit offerings. These include checking and savings accounts, certificates of deposit (CDs), bill paying, and more. Consumers can access cash through over 60,000 of Discover's no-fee ATMs across the U.S.
Discover Card Rewards
Rewards for Discover credit cards vary depending on the card. For example, you can earn 5% cashback with the Cash Back card on categories that change on a quarterly basis, such as gas, grocery stores, and Amazon. You also earn 1% cashback on all other purchases. Cashback doesn't expire and can be redeemed into your bank account, used as a credit against your Discover card balance, or used at checkout at Amazon or Paypal.
The Student Cash Back and Student Chrome cards provide 5% and 2% cashback, respectively. Discover will also match the cashback rewards you earn during the first 12 months you have your Cash Back, Student, Student Chrome, and Secured cards.
You'll earn 1.5 miles for every dollar you spend on the Miles card, and all of your miles in the first year of card ownership will be matched mile-for-mile. The NHL card, in addition to earning cashback, will provide an unlimited dollar-for-dollar match of all the cash back you earn in the first year.
Can I Use My Discover Card in Europe?
Yes, you can use your Discover card in Europe. Discover has a global network that allows its cardholders to use their credit cards internationally. Discover does not charge foreign transaction fees.
What Bank Owns Discover Cards?
Discover credit cards are owned and issued by Discover. They take on the financial risk of issuing cards, unlike Visa and Mastercard, which only operate payment networks while the cards are issued by other financial institutions.
Is a Discover Card Difficult to Get?
Like all credit cards, the difficulty of obtaining one will depend on the applicant's credit history. Those with strong credit histories, high credit scores, will not find it difficult to get a Discover credit card. Those with poor histories will find it difficult.
The Bottom Line
Discover came to the market in 1986 as a customer-friendly card option. It continues to maintain those traits but the benefits that set the brand apart years ago are now fairly standard in the industry.
Carefully review the terms on each of its cards before applying. Two cards may look similar but have significantly different terms.
If you receive an offer in the mail, compare it to what's listed on theDiscover website. And if you routinely hold a balance, the rewards may not make up for the interest payments, especially if you end up with one of the higher interest rates.
