Whatever you think of the cards themselves, it can't be denied that Discover is having a blockbuster year. First, it dethroned 9-time customer service ratings champion American Express. And on the 4th quarter categories, Discover runs away with the prize in the competition between the 2 top dogs (Discover and Freedom) in the 5% rotating category competition. Discover has Amazon.com, department stores, clothing stores. Basically, your holiday shopping covered. Okay, last year they had all online shopping but depending on your shopping pattern one may well find clothing stores and department stores just as useful.
Chase, in the mean time, stuck the Freedom with Amazon.com... and ... umm, audible.com and ahem, diapers.com. So happy day, new parents (but you might find these diapers in whachamacall it... oh yeah, department stores) and audio-book lovers. But it's hard to hide the fact that it's very, very weak compared to Discover. Add in the double cash promo for Discover going on now, and it's a complete rout.
Why do you suppose this is? Chase is a giant in the industry, and its targeting of Amex has been quite successful. But in my opinion, it's exactly the way Chase did it that is now whipping them in the competition against Discover. This is of course all my opinion, but here's what I think is eating Chase's lunch:
Overly generous sign-up bonuses. I know this is popular around here, and Chase did this to go after Amex's business, but there's a flip side to this. Chase has been aggressive about the sign-up bonus across its cards, which of course made it the darling of lots of blogs that tell you how to "travel for free" and lots of forums. Which in turn created bonus chasers, churners who took advantage of the bonuses, but didn't put in the spend elsewhere for Chase to make money. They have to make that profit up somewhere. Best place to attack? A card that has no AF (little reason for consumers to complain as opposed to nerfing an AF card) but presents a huge earning potential. That willingness to dongle the gigantic sign-up bonus carrots, I think, eventually led to policies like the 5 new accounts in 2 years, and now this.
Discover has no lump-sum, up-front bonuses. Their double the rewards program is designed so people use their card more over a long period of time, instead. Chase could learn from this.
The UR program is popular, generous, and too easy to accumulate lots of points for. I have lost count of how many bloggers, YouTubers, and forum members have presented a combination of the Freedom and the CSP as the perfect combination for high earning potential. Use the Freedom categories for 5x points, the CSP for dining when it isn't a category for Freedom, take your pick on the cards on other spend, and voila! And the thing is, these people are right. But the UR points, transfer partners, etc. aren't free to Chase! They have to pay for it. If they are not getting enough non-cat spend (for their perspective, not the consumer's), they have 2 choices: officially nerf a UR earning card, or unofficially make it harder for people to rack up those points. It looks to me like they chose the second route by making the categories less useful. More useful categories = more 5x use (which is a loss leader), less useful categories = less so overall.
I mean, compare Amex's approach to this. Their only no-AF MR earning card, the Everyday gives you only 2x MR points on supermarkets with 1x on everything else with a small potential 20% bonus. Not to mention Amex makes more money in swipe fees than Chase.
Discover focuses on one product (primarily), making it your default card, uncomplicated rewards (cash), and providing useful categories so it's always in your wallet. Smart, and I think it's working.
Annnnywaaaay. I think I've made this long enough. Time for your input. 
I do agree that in terms of pure cashback, Discover outwins Chase Freedom by a landslide.
Don't know much about customer service since I don't have Discover and I've never called Chase for anything ever (I never call customer service). My only Chase CS experience would be in-branch and I've only ever had polite, courteous service there. If I was interested in another rotating card, I would consider Discover but at this point, I'm sort of over this rewards thing and would rather just have something simple like Quicksilver.
Quicksilver $10,000 | Better Balance Rewards $2000 | Sallie Mae $3500 | Freedom $3500
@yfan wrote:Whatever you think of the cards themselves, it can't be denied that Discover is having a blockbuster year. First, it dethroned 9-time customer service ratings champion American Express. And on the 4th quarter categories, Discover runs away with the prize in the competition between the 2 top dogs (Discover and Freedom) in the 5% rotating category competition. Discover has Amazon.com, department stores, clothing stores. Basically, your holiday shopping covered. Okay, last year they had all online shopping but depending on your shopping pattern one may well find clothing stores and department stores just as useful.
-- Agreed. Discover is having a heck of a year! Probably their best year (CC division anyway) that I can recall. While I agree Discover's customer service is the best (aside from JPM Ritz, but not fair comparison, given the fee), Amex is likely still better when it comes to claims, warranty, and Merchant disputes. For me, the latter is what I look for more important for me than answering phones quickly, perky and perfect American accent, and saying a bunch of uplifting things to me on the phone.
Chase, in the mean time, stuck the Freedom with Amazon.com... and ... umm, audible.com and ahem, diapers.com. So happy day, new parents (but you might find these diapers in whachamacall it... oh yeah, department stores) and audio-book lovers. But it's hard to hide the fact that it's very, very weak compared to Discover. Add in the double cash promo for Discover going on now, and it's a complete rout.
-- Ah, while I'm sure the categories are important to some, they aren't to me. Of course, I know of Amazon, but only spend about $100 per year. The rest? Have no idea, and don't even care enough to search or ask anyone about them.
Why do you suppose this is? Chase is a giant in the industry, and its targeting of Amex has been quite successful. But in my opinion, it's exactly the way Chase did it that is now whipping them in the competition against Discover. This is of course all my opinion, but here's what I think is eating Chase's lunch:
Overly generous sign-up bonuses. I know this is popular around here, and Chase did this to go after Amex's business, but there's a flip side to this. Chase has been aggressive about the sign-up bonus across its cards, which of course made it the darling of lots of blogs that tell you how to "travel for free" and lots of forums. Which in turn created bonus chasers, churners who took advantage of the bonuses, but didn't put in the spend elsewhere for Chase to make money. They have to make that profit up somewhere. Best place to attack? A card that has no AF (little reason for consumers to complain as opposed to nerfing an AF card) but presents a huge earning potential. That willingness to dongle the gigantic sign-up bonus carrots, I think, eventually led to policies like the 5 new accounts in 2 years, and now this.
-- Years ago, by hiring Mr. Gordon Smith away from Amex, Chase made a strategic choice to commit considerable resources to aggressively compete for Amex's top tier "white shoe" clientelle. Of course, this would require a world class travel rewards program, very high to no caps on rewards, and significant upfrong client acquisition costs. Of course, I agree (obviously), Chase wasn't targetting the bonus chaser or perk abuser, but I suspect they accepted it as a necessary short term price to pay for coveting Amex's spendcentric cardmembers. Competition benefits consumers and should be encouraged at every turn. In my view, Amex had gone far too long without some kind of competition. Naturally, in any competitive environment, while consumers benefit with the sudden proliferation of free points (combination of price war and unprecedentd QE, zero rates, and cheap money), all the Issuers found utilizing free cash towards client acquisition as a much better option to earning zero interest and incurring a higher tax liability. I sense UR inflationary pressure is the reason why Chase has implemented the 5 in 24 restriction on their UR based cards.
Discover has no lump-sum, up-front bonuses. Their double the rewards program is designed so people use their card more over a long period of time, instead. Chase could learn from this.
-- Well, different business model. Chase, by targeting on Amex's travel rewards spenders, has basically made a strategic decision to devote less resources to their cashback offerings.
The UR program is popular, generous, and too easy to accumulate lots of points for. I have lost count of how many bloggers, YouTubers, and forum members have presented a combination of the Freedom and the CSP as the perfect combination for high earning potential. Use the Freedom categories for 5x points, the CSP for dining when it isn't a category for Freedom, take your pick on the cards on other spend, and voila! And the thing is, these people are right. But the UR points, transfer partners, etc. aren't free to Chase! They have to pay for it. If they are not getting enough non-cat spend (for their perspective, not the consumer's), they have 2 choices: officially nerf a UR earning card, or unofficially make it harder for people to rack up those points. It looks to me like they chose the second route by making the categories less useful. More useful categories = more 5x use (which is a loss leader), less useful categories = less so overall.
-- A few years ago, I recall discussing with fellow travel rewards enthusiasts on this very issue. Given the vast increase on the number of UR points issued (through bonuses, MS, churns, etc...), devaluation would be the natural result. Even if Chase didn't have an issue, their Partners most assuredly would object. In the beginning, I can recall the incredible value for redeeming at UA & Hyatt--they were breathtaking when combined with 2X 100K Ink bonuses & 5X Office store GCs! I'm only surmising, but I'd imagine both UA and Hyatt expressed these concerns to Chase. While I'm not a conspiracy theorist (I've been around the block, as they say), I suspect Chase, along with all the other Issuers, had strategically planned to devalue their points. Print currency, give it way, and just make it worth less. Perfect!
I mean, compare Amex's approach to this. Their only no-AF MR earning card, the Everyday gives you only 2x MR points on supermarkets with 1x on everything else with a small potential 20% bonus. Not to mention Amex makes more money in swipe fees than Chase.
Discover focuses on one product (primarily), making it your default card, uncomplicated rewards (cash), and providing useful categories so it's always in your wallet. Smart, and I think it's working.
Annnnywaaaay. I think I've made this long enough. Time for your input.
Also, the cost to Chase isn't as great as it may appear. They purchase these points at a very high volume and greatly reduced rates.
