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Senior Contributor
Open123
Posts: 3,943
Registered: ‎02-23-2011

Re: Is Discover too aggressive lately?

[ Edited ]

Assuming "all things being equal," I'd imagine Discover would have to be aggressive in order to expand the market of their targetted demographics--those card users interested in cashback only.

 

Discover Strengths:

 

1.  5% rotatiing categories - but limited to $1,500 (same as Freedom, Citi Dividend)

2.  No forex fee 

3.  shopdiscover.com - best shopping portal, in my estimation (which works even if you use another card, i.e., use Amex through the shopdiscover link)

4.  Tremendous value when cashback is redeemed for retail giftcards

5.  No annual fee

 

So, why would Discover appeal to the "big" spender (who qualifies for the card of his choice) who is *only* interested in cashback (no gift card redemptions) if he can just use the no-fee 2% cashback Fidelity Amex for all *non* bonus category purchases?  Any reason to use Discover after the $1,500 per quarter limit is hit?

 

Discover needs to be aggressive because they appeal only to those who either: don't qualify or don't know about the Fid Amex 2%; don't spend enough where the $1,500 limit is an issue; or, just don't spend enough in general to make having Fid Amex (open a brokerage account) worthwhile.

 

All this would suggest their business model should target lower spenders interested in cashback redemption of retail giftcards who shop primarily with their shopdiscover.com merchants.  

 

To anyone else, Discover is a niche card.  An extremely good one, but niche nonetheless.  

 

So, even if you could have, aside from lowering utility (or, balance transfer, even then there are better ones out there), what would be the value of higing a high CL for Discover?  The joy of logging in and looking at it everyday?

Moderator
Revelate
Posts: 8,163
Registered: ‎12-30-2011

Re: Is Discover too aggressive lately?

We've seen a spree of approvals for Discover IT's here and elsewhere, and honestly that's not much different from any other new card which have whatever attraction going for it gets found here (or similar forums).  There's a certain amount of wanting the new flashy thing; however, I think there's a few things to keep in mind:

 

  • It doesn't appear that their underwriting criteria has changed much if at all from Discover More.  I would suggest that it's still one year of history and roughly 640 FICO for minimum standards, and I don't think they've opened the floodgates as a result, just there's simply more interest from their target demographic.
  • This forum doesn't represent a good sampling of the credit using population as a whole; I have still yet to see any Discover card used out in the wild.  They're not going to displace Amex / Chase / BOFA any time soon I suspect in terms of total approvals and usage.

End of the day I don't think they're giving away cards like halloween candy, it's just more people here are interested in the card.  If you want to talk about essentially buying market share, what Chase did with the Freedom 8-9 months ago, or Amex with their revolvers, is much more in the spirit of halloween candy than I think Discover's policies regarding the IT.

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webhopper
Posts: 7,230
Registered: ‎09-16-2011

Re: Is Discover too aggressive lately?


thom02099 wrote:

Discover has whittled down their card selections, with only the IT card and a couple of business cards showing up on their website.  Seems like they've perhaps narrowed their focus to an even more select niche market, and are going after that market aggressively. 

 

Had no problem here getting a CLI to $10K with Discover, and that was before hitting the 800s. 

 

Even though they may appear overly generous with CL/CLI as witnessed by some of the posts here, keep in mind that folks here are a very select few in the vast scheme of Discover customers, most of whom have no idea about CL/CLI and how to go about maximizing their card's benefits.  I think they are still a very conservative company, just that folks that know how to play the credit game get the best benefits from them. 


Does anyone know if Discover Business card reports to personal credit?


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Valued Contributor
thom02099
Posts: 1,314
Registered: ‎08-30-2011

Re: Is Discover too aggressive lately?


webhopper wrote:

thom02099 wrote:

Discover has whittled down their card selections, with only the IT card and a couple of business cards showing up on their website.  Seems like they've perhaps narrowed their focus to an even more select niche market, and are going after that market aggressively. 

 

Had no problem here getting a CLI to $10K with Discover, and that was before hitting the 800s. 

 

Even though they may appear overly generous with CL/CLI as witnessed by some of the posts here, keep in mind that folks here are a very select few in the vast scheme of Discover customers, most of whom have no idea about CL/CLI and how to go about maximizing their card's benefits.  I think they are still a very conservative company, just that folks that know how to play the credit game get the best benefits from them. 


Does anyone know if Discover Business card reports to personal credit?



 There are/will be a variety of answers to this question.  Here's one answer
:http://www.sba.gov/community/blogs/do-credit-cards-your-business-report-your-personal-credit-reports
 
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New Contributor
Chrysostom
Posts: 58
Registered: ‎04-15-2012

Re: Is Discover too aggressive lately?

[ Edited ]

I was talking about


Open123 wrote:

For maximizing cash value, I'm curious why you have a loyalty to Discover?  Would it not be more beneficial to use 5% on Discover *only* up to the $1,500, and then everything else on the no-fee 2% Fid Amex?  And, whatever in between make it up with the 5% Freedom?

Open123 wrote:

All this would suggest their business model should target lower spenders interested in cashback redemption of retail giftcards who shop primarily with their shopdiscover.com merchants.  

 

To anyone else, Discover is a niche card.  An extremely good one, but niche nonetheless.  

 

So, even if you could have, aside from lowering utility (or, balance transfer, even then there are better ones out there), what would be the value of higing a high CL for Discover?  The joy of logging in and looking at it everyday?



Second one first: I agree. Discover is a niche card, and I think your target demographic is the one that DFS wants - those who don't mind the lower limits and will use their Discover card for non-5% purchases as well, and not just use it for the categories. Of course, like all CCCs, they want revolvers and not transactors, as 5% cash back is more than even the interchange fees can cover - using such a card in such a manner loses money for the bank, until you revolve a balance for one month. A high limit on a Discover is worth it so you can charge the full $1500 on it at a time without hitting 30-50% UTL, and to help overall UTL (and manual review: from what recon analysts have told me, having open high-limit trade lines with Discover looks even better to them than the same with Amex).

Discover has an effective 10% rate of return when redeemed for GCs, each Cashback Bonus penny being worth two GC pence.

The only other purpose would be for a BT, and a card has to have at least around a $10k limit before BT becomes worthwhile. Discover is one of the few rewards cards that has a decent BT offer, if you can actually pay the balance off within 18 months (Chase Freedom has a 15 month offer, and Citi Forward 12 months). However, they all charge 3%, so if you're looking for a BT, get the Chase Slate, and 0% BT fees. Otherwise, you have the Citi Diamond Preferred, the Citi Simpliciti, etc.

The only other theoretical use I can think of for high Discover CL is the fact it has no F/X fee and no AF, and I believe it earns cashback overseas. This could be advantageous for people who can't qualify for the "elite" travel cards (CSP and Amex PRG and Platinum, essentially), or don't want to spend the $100-500 AF for them. Discover has better acceptance (through Diner's Club) in parts of Europe, and through the partnership with China (I believe) in Asia, than it does in parts of America like NYC. Most of the other cards with no F/X fee are Visa Signatures, which take quite a bit more to get ahold of than a Discover card does.

First one second:

I was talking more about why I think Discover is a good bet to invest in - they have high loyalty and low default rates, and they are their own bank (like American Express), which puts them in a different league for the rest of the CCCs, which are mainly payment processing networks.

I generally only slap whatever is currently going for 5% on Discover or Freedom, and rarely hit the full $1500. I want the USBank Cash+, but I never even heard of the card before they nerfed it recently, so wasn't able to include it in my latest app spree (even though you can't apply online, I think there's a USBank around here somewhere). I use the Citi Forward for restaurants and Amazon (an effective 4.1% rate of return when redeemed for Shop with Points on Amazon or high-denom GCs, which can be liquidated through a very circuitous process, but I spend a lot of money on Amazon anyways, so whatever I save there, is money off of travel, in effect), the BCE for groceries, and the Chase Amazon for Amazon purchases and even sometimes for the 2 UR points (gas stations and restaurants) if I need to get a certain amount of UR points for a redemption (I don't think you can buy UR points - I've never found out how to, at least), taking a lower absolute rate of return for a higher relative one (i.e. actually getting the flight, instead of having 29.2k UR points sitting there doing nothing).

Chase has worse 5% categories (Starbucks, for Christ's sake?!), but better redemptions, as a UR point is worth more than a cent, and can be redeemed for travel almost anywhere. Discover has a much better online shopping portal (ShopDiscover) for non-travel redemptions, though, compared to the Ultimate Rewards Mall.

Almost everything else I put on the SPG Amex, which has an effective rate of return of above 2%, according to my calculations - an SPG point is flexible as long as you use it for Starwood hotels or any kind of flight (you can use it for other hotels as well by a SPG-airline-other-loyalty-program trick, but it breaks the Terms and Conditions, and tends to be lacking in value). It's not flexible if you don't want to redeem it for travel, because Starpoints are only worth about 1.2c when redeemed for GCs.

5% cash back blows 2.14 UR points or 1 SPG point out of the water - I can use the 5% cash back to buy over 2 SPG points at normal rates (they're generally sold for 2.2-2.5c) or miles in any program of my choice when they have a sale. So, when cash back gets up in to the 4-5% range, it starts becoming a better deal, period, than any kind of points-earning card. At 3% (BCE) it's close to break-even, at 6% (BCP), it's no competition. However, anything earning less than ~2.5% cash back isn't going to beat the better points cards (SPG, CSP, PRG [if you spend at least $30k a year on it] and whatever you've got for the signup bonus recently, like BA or SWRR).


2% cash back is about equal to 1.7 UR points, and about 0.8 SPG points. As I've said before (maybe in this thread), Capital One has a card that offers 2 points per dollar (as does, or did, Discover), the Venture (and Escape, respectively), but I don't think No Hassle Miles or Discover Miles are going to be as good for redemptions as UR, or even MR. I've never had either card, so that might be because no one on the Travel-O-Rama blogosphere puffs up NHM or Discover Miles like they do UR.


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New Contributor
Chrysostom
Posts: 58
Registered: ‎04-15-2012

Re: Is Discover too aggressive lately?


youngandcreditwrthy wrote:

It's also worth noting that Amex is number ONE on JD Power's list for Customer Service in banking! Saw it last night on something! I can't justify using Discover as an every day card as the rewards on my Motiva just aren't that great:-/

It was a 768 (Discover) to 771 (Amex) score from what I've heard - they're equal in customer service, according to the JD Power maths (I doubt a human can discern that small of a difference, out of 900, I believe), but Discover still is better: lower waits, good CS on every card (the BCE CS is now outsourced), easier phone system, etc. Look up the actual reward on JD Power's site - Discover and Amex both have 5 stars in most categories, with Amex having 5 for rewards and Discover falling to 4, and Discover having 5 for problem resolution, and Amex falling to 4. 

The next-closest was Chase, which was around 680, I think.

Link: http://www.jdpower.com/consumer-ratings/Financial+Services/ratings/909201366/2012-Credit+Card+Satisf...


Goal: 760 by End of Year
Current Score: 714 TU (2-3/12); 681 EQ (2-3/12); 714 EX (AmEx Pull: 2-7/12); 777 VantageScore (2-3/12)
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Application-Free Since the 14th of the Second May of 2012.
Regular Contributor
honky
Posts: 160
Registered: ‎01-28-2012

Re: Is Discover too aggressive lately?

I dont know about everyone else, but I get mail for IT at least once every week...and so does my wife.  By far, the most aggressive marketting.  Next on the list would be AMEX business cards for me.

 

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Moderator
webhopper
Posts: 7,230
Registered: ‎09-16-2011

Re: Is Discover too aggressive lately?

[ Edited ]

Revelate wrote:

We've seen a spree of approvals for Discover IT's here and elsewhere, and honestly that's not much different from any other new card which have whatever attraction going for it gets found here (or similar forums).  There's a certain amount of wanting the new flashy thing; however, I think there's a few things to keep in mind:

 

  • It doesn't appear that their underwriting criteria has changed much if at all from Discover More.  I would suggest that it's still one year of history and roughly 640 FICO for minimum standards, and I don't think they've opened the floodgates as a result, just there's simply more interest from their target demographic.
  • This forum doesn't represent a good sampling of the credit using population as a whole; I have still yet to see any Discover card used out in the wild.  They're not going to displace Amex / Chase / BOFA any time soon I suspect in terms of total approvals and usage.

End of the day I don't think they're giving away cards like halloween candy, it's just more people here are interested in the card.  If you want to talk about essentially buying market share, what Chase did with the Freedom 8-9 months ago, or Amex with their revolvers, is much more in the spirit of halloween candy than I think Discover's policies regarding the IT.


Ive seen discover out in the wild twice. My husbands MC friend carries one and my daughters friends mom carries one. They are nice cards but not as well known as visa / mc

On amex business card marketing; my husband gets mail for simply cash once or twice per week... tear it up and throw in the trash

Starting Score: 08/29/2011 TU 671 EQ 674
Current Score: TU 754 EQ 694 EX 697
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FrugalRican
Posts: 2,876
Registered: ‎02-02-2012

Re: Is Discover too aggressive lately?

Funny, because to me, they haven't been aggressive enough.

 

Home Improvement for the 2Q and nothing else?

SD for three months, I say.

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Senior Contributor
Open123
Posts: 3,943
Registered: ‎02-23-2011

Re: Is Discover too aggressive lately?


FrugalRican wrote:

Funny, because to me, they haven't been aggressive enough.

 

Home Improvement for the 2Q and nothing else?

SD for three months, I say.


Next quarter it could the "groupon" card, I suppose.

 

If they wanted to compete more, I think they should at least offer a base 1.10% cashback on the IT card.  This will at least place them on equal footing with the Freedom.


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