Discover it Student Cash Back vs Discover it Student Chrome

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Student credit cards are a good fit for those with limited credit history or low income, since they tend to have less stringent application requirements than other consumer cards. Our list of the best student credit cards features two Discover credit cards: the Discover it® Student Cash Back – Product Name Only and the Discover it® Student chrome – Product Name Only.

While these two cash-back credit cards are identical in many respects, they have a few crucial differences. Read on to find out what you’ll get from each card, and why you should prefer one to the other.

We’re focused here on the rewards and perks that come with each card. These cards won’t be worth it if you’re paying interest or late fees. When using a credit card, it’s important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay.

Discover it Student Cash Back and Chrome Welcome Bonus Offers

Neither the Discover it® Student Cash Back – Editorial Name Only nor Discover it® Student chrome – Editorial Name Only offer a conventional welcome bonus. Instead, both cards come with Discover’s Unlimited Cashback Match, which automatically matches all the rewards you earn after your first year as a cardholder. For example, if you earn $500 of rewards in your first 12 months, Discover will match it to give you a total of $1,000.

While the terms of the cashback match are the same for both cards, its value depends on how much you’re able to earn in rewards during your first year. That in turn depends on your spending habits, but it also favors the card with the higher earning potential.

Ongoing Rewards Earning

The rewards offered by these two student cards are the primary distinction between them. The Discover it® Student chrome – Editorial Name Only has a fairly simple rewards structure: You’ll earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter (then 1%), and 1% unlimited cash back on all other purchases. No activation is required to earn 2%; the higher rate applies automatically each quarter until you hit the $1,000 limit.

In contrast, the Discover it® Student Cash Back – Editorial Name Only earns 5% cash back in popular rotating bonus categories on up to $1,500 in combined spending each quarter (then 1% back), as well as 1% back on other purchases Discover It Cashback rotation. The 5% bonus requires enrollment each quarter; otherwise, you’ll earn 1% cash back. 

In the quarterly periods from the beginning of 2017 through the present, the Discover it® Student Cash Back – Editorial Name Only has offered 15 unique 5% bonus categories. However, more than half of those categories have appeared just once or twice in that time, and only five categories have been available more than five times: gas, grocery stores, restaurants, Amazon.com, and wholesale clubs. Notably, gas stations and restaurants have both been offered as 5% bonus categories every year for the past six years — gas stations haven’t been offered yet in 2023, but it won’t be surprising if they will be.

In case it’s not clear at first glance, the rewards structure offered by the Discover it® Student Cash Back – Editorial Name Only is almost universally preferable to that offered by Discover it® Student chrome – Editorial Name Only. That holds true even if you spend exclusively on gas and restaurant purchases that earn 2% on the Chrome card. Consider a few examples to illustrate how the Chrome card is inferior.

First, let’s look at the optimal case for the Discover it® Student chrome – Editorial Name Only, which is spending exactly $1,000 per quarter on gas and restaurant purchases to max out the 2% cash back bonus. Setting aside purchases outside those two categories, you’d earn $20 of rewards each quarter, and $80 annually (before the cashback match).

Now consider the same $1,000 of spending each quarter on the Discover it® Student Cash Back – Editorial Name Only, assuming Discover continues to offer gas and restaurants as 5% bonus categories, and that your spending in those categories is reasonably consistent throughout the year. Your return would vary from one quarter to the next depending on the Discover cash-back calendar, but regardless of the timing, you’d earn 5% on $1,000 of spending ($50) and 1% on the other $3,000 ($30). That adds up to the same $80 worth of rewards for the year. In other words, the best-case scenario for the Chrome card is to break even with the Cash Back card.

As another example, imagine you spend $1,500 per quarter on gas and restaurant purchases. Once again setting aside other purchases, you’d earn $25 per quarter on the Chrome card, or $100 annually. In contrast, using the same assumptions above, you’d earn 5% on $1,500 of spending ($75) and 1% on the other $4,500 ($45) with the Cash Back card. That totals to $120, or 20% more than what you’d earn from the Chrome card. 

Remember, that assessment only accounts for gas and restaurant purchases — if you take advantage of other 5% bonus categories throughout the year, then the disparity between the two cards becomes even more apparent. Furthermore, the difference in rewards is doubled after the first year thanks to the cashback match.

Benefits, Fees, and Other Features

As student credit cards with no annual fee, neither the Discover it® Student chrome – Editorial Name Only nor the Discover it® Student Cash Back – Editorial Name Only offer strong benefits, but they come with identical sets of low-key perks you may find helpful or enjoyable, especially if you’re new to using a credit card.

Both cards offer late payment forgiveness, which waives the late fee the first time (and only the first time) you make a late payment. After that, you’ll be subject to the standard late fee. Both cards also allow you to view your FICO score in your online account, so you can keep tabs on your credit profile and make sure your score is moving in the right direction. Finally, you can personalize either card a bit by selecting from among a few dozen design options.

The fee structures on both cards are also identical. There’s no annual fee and no foreign transaction fees. Both cards offer an introductory 0% APR: Discover it® Student Cash Back – Intro APR, followed by a Discover it® Student Cash Back – Regular APR APR. You’ll pay a fee for balance transfers and cash advances, 3% intro balance transfer fee and up to 5% fee on future balance transfers (see terms). Late and returned payments incur fees of up to $41 (other than the first late payment as described above).

Discover it Student Cash Back vs Chrome: Side-by-Side Comparison

 

Discover it® Student Cash Back – Product Name Only

Discover it® Student chrome – Product Name OnlyAnnual Fee

Discover it® Student Cash Back – Annual Fee

Discover it® Student chrome – Annual FeeRewards Rate

5% cash back in categories that rotate each quarter on up to $1,500 in combined spending when you activate (then 1%) Discover It Cashback rotation

1% cash back on all other eligible purchases

2% cash back at gas stations and restaurants on up to $1,000 in combined spending each quarter (then 1%)

1% cash back on all other eligible purchases

Welcome Bonus OfferNone, but Discover offers dollar-for-dollar match of all cash earned the first year

None, but Discover offers dollar-for-dollar match of all cash earned the first year

Card Benefits

Free FICO score

No late payment fee on your first late payment (then up to $41)

No foreign transaction fees

Discover it® Student Cash Back (then a Discover it® Student Cash Back APR)

Free FICO score

No late payment fee on your first late payment (then up to $41)

No foreign transaction fees

Discover it® Student chrome (then a Discover it® Student chrome APR)

Review

Discover it Student Cash Back card review

Discover it Student Chrome card review

Is the Discover it Student Cash Back or Chrome Right for You?

Sometimes credit card comparisons don’t reveal a clear winner, but this isn’t one of those times. Given the similarities between the Discover it® Student chrome – Editorial Name Only and Discover it® Student Cash Back – Editorial Name Only, a comparison of the two boils down to their different rewards structures, and on that count, the Discover it® Student Cash Back – Editorial Name Only is unequivocally superior. 

At best, the more consistent 2% rewards on the Chrome card match the less consistent 5% rewards on the Cash Back card. If you can use the rotating 5% bonus categories other than gas and restaurants, or if your spending in those categories exceeds the quarterly cap on the Chrome card, then the Discover it® Student Cash Back – Editorial Name Only comes out ahead.

If you’re deciding between the two, choose the Discover it® Student Cash Back – Editorial Name Only card. However, keep in mind there are credit cards for students with no credit that may yield a better return or more useful benefits depending on your needs and spending habits.

Read the original article on Business Insider

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