American Express vs Discover

Seeking perfect affordability, qualification requirements, and earning opportunities can entangle your mind. Paving through this dilemma made me realize the need to compare and deduce.

Hence, I compared American Express vs. Discover and found out which company has better cards. Here are my results for you to look at and find a solution.

American Express vs. Discover General Overview

Amex and Discover have increased their outreach drastically in the last few years. Their domestic and global partners are in millions, lagging just a little behind Visa and Mastercard. 

You should read this comprehensive comparison between the two companies to decide the suitable one.

Overview of American Express

Amex is known for its luxury perks and high standards when selecting customers. You must have an excellent credit score to apply for an Amex card.

You can choose a suitable card from the 17 credit cards the company offers—Amex partners with several popular travel, dining, entertainment, and hotel brands.

Card Fees

You pay high fees to become an Amex card member. You incur an annual fee of up to $695 with most Amex cards. You also pay the maximum interest rate of around 30% if you carry a statement-to-statement balance.

You also pay a 3% charge on balance transfers and cash advances each. However, you are exempt from a foreign transaction fee, reducing expenses during travel. You incur the usual $40 late payment fee that you can easily avoid by setting reminders.

Amex Offers

It is a targeted value-adding program Amex has for its consumers. You can:

• Get discounts
• Earn cash back
• Accumulate reward points 

For shopping at Amex brand partners. You enroll your card at Amex Offers via the app or website. You then have to enroll in the ongoing offer for your card. You receive rewards when you shop with the offered brand(s).

Rewards

You get various welcome offers and intro APR periods with these cards. The bonus depends on the card type and ongoing special offers, if any.

Amex offers a mix of reward points and cashback on its cards. You get bonus points on spending categories with most cards. These cards focus more on travel categories than everyday spending. There are a few cards for families, like Amex Blue Cash Preferred, though.

You get a mid to above-average cash back percentage for these cards. Amex offers only three cash-back cards at the moment. You earn reward points or miles for the rest. You get up to 6% cash back that you can redeem in purchases or payoffs.

Membership Rewards Program

It is the points redemption system Amex has designed for its customers’ benefit. You can redeem your earned points in various categories here. You can:

• Pay with points at checkout at physical or online stores like Amazon.
• Get gift cards for travel, retail, and restaurants. You can also get Amex’s own gift cards.
• Pay your Amex card and account charges with the reward points.
• Convert the points into statement credit.
• Redeem points with Amex Travel for flights or hotels.
• Transfer points to Amex travel partners for almost or entirely free flights. Amex partners with 21 major global and domestic airlines at the moment.

The points value differs for each category and brand. You can check the offer-wise value at the Amex website. This rewards program is eligible for all card members.

Overview of Discover

Discover offers seven credit cards in its portfolio. Each card has a unique set of features and offers. Furthermore, you can access several brands once you become a card member. This issuer is known for its straightforward reward system.

Card Fees

You might prefer Discover because it does not charge an annual fee on its cards. Unlike other companies with at least a few cards that incur a yearly fee, Discover is a $0 annual fee issuer. 

You don’t have to pay a foreign transaction fee on these cards. This, along with no annual fee, makes Discover cards quite affordable.

With these cards, you incur up to 28% APR on purchases and almost 30% APR on cash advances. However, you can avoid it if you clear your monthly due balance. It is the best practice to maintain a healthy financial record.

You also pay a 5% fee on balance transfers. That said, the intro offer of these cards can make your payoffs cheaper. However, note that you can incur a $40 late payment fee if you do not pay your statement balance before your billing cycle ends.

Rewards

You might be overwhelmed by the generous three-tier bonus offer on all these cards. You get:

• A cash back match at the end of your first year. No matter how much cash back you earn throughout the year, Discover will double it on your first cardmember anniversary. For example, if you earn $1,000 cash back, it will become $2,000. It increases your cash pool significantly.
• A 0% intro APR for your initial cardmember months. This period ranges from 6 months to 15 months. Discover Student cards and the Discover Secured card offer six months. It means you can spend without having to pay huge interest.
• A 3% intro fee on balance transfers until your intro APR lasts. You pay the usual 5% after that. It can be particularly beneficial if you want to clear a loan or a big purchase.

Discover rewards cash back with all its cards except Discover It Miles. You get bonus miles for spending with it. The reward percentage ranges from 1% – 5%. Moreover, most Discover cards offer a 2% – 5% cash return on rotating categories. It is a plus that groceries, gas stations, and restaurants are usually included.

Rewards Redemption

You can redeem your cash back or miles rewards through multiple channels. You can:

• Deposit cash into your account. You get a dollar-to-dollar value for your cash back. As for miles, 1 mile = 1 dollar.
• Pay your Amazon shopping with your rewards at the checkout.
• Redeem them towards your PayPal account and pay for your purchases.
• Get gift cards for popular brands like Nike, Macy’s, etc.
• Donate your rewards to charity. You can get more details by emailing the issuer or calling them directly.

Comparing American Express and Discover

Both credit card issuing companies operate on their own networks and have unique benefits structures. Nonetheless, they are alike and unlike in several aspects. 

Similarities

Both issuers have similar work frames because:

• Both have millions of brand partners to increase global reach.
• Both have multiple options for reward redemption. You can choose between statement credit, gift cards, or paying for online purchases.
• Both issuers have intro offers on their cards. Additionally, both Amex and Discover cards have intro APR periods for your benefit.
• Both issuers operate on their separate networks. They don’t collaborate with Visa or Mastercard like other credit card companies.

Differences

Both issuers have different work frames because:

• Amex incurs a high annual fee for its cards. Contrarily, Discover has a $0 annual fee policy for all its cards.
• You get reward points for most Amex cards except three. You get cash returns on all Discover cards except one.
• Amex focuses its rewards on travel categories. However, Discover targets everyday spending like groceries and gas stations as rewarding categories.
• You need an excellent score to apply for Amex cards. On the other hand, you can get a Discover card with a zero to poor score, too.
• Amex is famous for its wide variety of statement credits and member-exclusive events. Discover is big on cash back and credit building.

Major Distinguishing Factor

You will find three significant distinguishing factors between these issuers. Amex:

• Is travel-centric
• Incurs a high fee
• Offers luxurious perks

Discover, on the other hand:

• Focuses on everyday spending
• Incurs a low fee
• Offers cash back opportunities

When to Use American Express

You should use Amex if you are a traveler who likes to enjoy premium benefits without minding a high card bill.

When to Use Discover

You should use Discover to earn big rewards on everyday expenses. That, too, for a low fee and building credit along the way.

Which Credit Card Issuer Is Better?

In my opinion, Discover is the better card issuer because of its:

• Low card fee
• Reachable qualification criteria
• Big cash back rewards

Related Questions

Final Verdict

Discover is a better card issuer because of its credit score requirements, low fees, and rewarding categories. It aims more towards everyday expenses. That said, Amex offers customers premium perks and huge travel rewards.