Discover Card
What Is Discover Card?
Discover is a credit card brand that is issued by the American financial services company Discover Financial (DFS).
Initially issued by retailer Sears, Roebuck and Co. in 1985, Discover cards sent off nationally in 1986, and first separated themselves for their decreased fee structure and spearheading cash-back rewards program. Discover has been an independent company beginning around 2007. Today, Discover Cards are among the most widely accepted cards in the world, alongside Visa (V), Mastercard (MA), and American Express (AXP).
History of Discover Card
Discover was made by a subsidiary of Sears in 1985, when many individual retailers and businesses were introducing branded credit cards for their individual stores to their customers. Discover immediately separated itself from the competition by charging no annual fee and offering one of the main cash-back rewards programs.
Discover initially was slow to develop, as few competing retailers were able to acknowledge the Sears department store card. Discover steadily expanded its network and is currently accepted in the vast majority of stores that acknowledge credit cards and in 200 countries. Starting around 2021, Discover is the seventh biggest issuer of cards worldwide.
How Discover Cards Work
According to a consumer's point of view, Discover cards may appear to be very like those offered under competing brands, like Visa or Mastercard. Notwithstanding, in the background are a few important differences between the functions of Discover cards and those of its competitors.
We can see this by comparing Discover to Visa cards, for instance. While Visa basically licenses the utilization of its brand name to giving banks, which then offer Visa-branded credit cards to their customers, Discover really issues credit cards directly, utilizing its own brand.
Consequently, Discover Financial earns interest income from its credit card customers, as well as charging payment processing fees to the shippers that acknowledge the Discover card as payment. Visa, paradoxically, generates revenue from its payments network yet doesn't directly profit from the credit card balances of its end user. Along these lines, Discover's business model is more like that of American Express, which is additionally a direct issuer.
In light of this, it's a good idea that Discover cards have generally offered alluring terms to draw in new users, for example, being the main major credit card brand to offer cash-back rewards. All things considered, the company's profitability depends on expanding not just the card's acceptance among vendors (consequently supporting transaction processing fees) yet additionally the average outstanding balance of their cardholders.
Incentives to encourage customers to borrow really utilizing their Discover cards, for example, expanding credit limits or postponing annual account fees, make sense given Discover Financial's overall business model.
Did You Know?
Discover card customer service is 100% U.S.- based and has an A+ rating from the Better Business Bureau.
Discover Cardholder Perks
Discover offers cards that primarily earn cash back, as well as one that offers generic airline miles (Discover it Miles). Discover's Cashback rewards program gives a percentage back on all purchases, with 5% cash back on rotating spending categories and dealers on eligible spending up to $1,500 each quarter (with 1% after that) and 1% on any remaining spending.
The following Discover cards earn Cashback rewards:
- Discover it Cash Back
- Discover it Gas and Restaurants
- Discover it Student Cash Back
- NHL Discover it
Other Discover cards have a variations on the cashback rewards structure. The Discover it Endlessly chrome Student cards offer 2% cashback on restaurant and gas purchases and 1% on other spending.
A unique feature of Discover cards is that they automatically match all cashback rewards earned in the principal year, which allows sagacious consumers to maximize rotating 5% cash-back categories to get 10% cash back on purchases in their initial 12 months. This makes the primary year of having a Discover card a great reward rate for credit card churners.
Illustration of a Discover Card
Suppose that Mia is considering applying for another credit card. While exploring her options, she sees critical variation in the terms and features offered by the different cards. For example, plain vanilla cards offer low fees in exchange for not many — if any — rewards programs, while different cards, for example, the Discover it Cash Back offered by Discover Financial, offer more liberal rewards programs and cash-back benefits.
Albeit these differences are in some cases explained basically by the different annual percentage rates (APRs) and account fees associated with the cards, Mia learned that these variations are additionally brought about by the distinct business models employed by the major credit card brands.
While certain companies, like Visa, generate money primarily from transaction volumes, different companies —, for example, Discover Financial and American Express — additionally loan money directly to their cardholders. Thus, the companies that issue cards directly to their customers bring an additional motivation to the table for rewards programs and different features that boost their customers to borrow all the more intensely on their cards.
The Bottom Line
Discover cards are widely accepted and offer competitive rates and rewards. Whenever utilized conscientiously, the automatic cash-back match during the primary year offers a rewards rate that can be difficult to beat with other personal credit cards at present on the market. Consumers ought to recollect that comparatively to companies like American Express, on the grounds that Discover is a direct issuer, it makes money when customers have more debt and are not paying off their balances every month. Similarly as with all credit cards, being conscious of your spending is key.
Highlights
- Discover is a consumer credit card brand known for its cash-back rewards program and diminished fee structure.
- Given its business model, Discover has an additional incentive to encourage its customers to borrow more intensely on their cards than on those of their competitors.
- Discover Financial issues its cards directly to its customers without utilizing intermediate bank issuers and in this manner profits directly from the interest earned on their credit card balances.
FAQ
Where Can I Find My Discover Account Number?
Your Discover credit card account number is equivalent to your Discover credit card number on the front of your card. In the event that your physical card isn't accessible, you can find your account number by signing in to your online Discover account, or by finding your most recent paper statement.
Where Is Discover Accepted?
Discover is accepted in the United States by the vast majority of the spots that assume praise cards. Internationally, Discover is accepted in 200 countries.
Who Owns Discover?
Discover was initially owned via Sears, then, at that point, by financial services provider Morgan Stanley, yet has been an independent company starting around 2007.
How Do I Make Discover Card Payments?
Since Discover issues cards directly to consumers, payments are made directly to Discover. You can do this by calling the number on the rear of your card, mailing in your payment with the payment stub on your bill, or signing in to Discover online and paying individually or setting up automatic payments.
How Might I Request a Credit Line Increase for a Discover Card?
Similar as American Express, on the grounds that Discover is a direct issuer that has a vested interest in making money off of consumers with high debt loads and interest payments, Discover will habitually raise credit lines for customers without being inquired. Assuming you want an immediate credit line increase, you can do as such by calling the number on the rear of your card or signing in to the Discover website and choosing "Card Services" and afterward "Credit Line Increase" from the account services tab.
Is Discover a Visa or a Mastercard?
Not one or the other. Discover is a separate card processing system completely and is accepted universally in many of similar spots where Visa, Mastercard, and American Express are accepted.
