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Discover vs. American Express
 Jan 12, 2009


When comparing Discover card versus American Express you must consider your credit card needs. This article will review the pros and cons of both American Express and Discover credit cards, and then let you decide for your self which works best for you.


Discover and American Express are two cards that are not used as much. However, they still have benefits, and Discover, especially, has a great cash back program. Indeed, Discover has one of the best cash back programs of any of the credit cards. American Express also has a good cash back program – often considered better than MasterCard or Visa. The main downside to using either Discover or American Express is that neither card is as widely accepted as Visa or MasterCard (although Discover is accepted at slightly more places than American Express).

Discover cash back program

The Discover cash back program is probably the best program available of any of the credit cards. This is a generous cash back program that provides 5% cash back on a number of purchases in categories that are popular and commonly used. The categories rotate throughout the year, though, so it is a good idea to check the rotation and buy in certain categories (travel, clothing, groceries, gas, restaurants, etc.) when they are offering the 5% cash back benefit. Any purchase that does not qualify for the 5% cash back aware gets 1% cash back – no matter what.

Another interesting things that Discover does is offer 5% cash back when you buy online through the ShopDiscover Web site. ShopDiscover includes such top retailers as Lowe's, Barnes and Noble, FTD, Ace Hardware, Bed Bath & Beyond and Target. Anytime you shop online through Discover's shopping site, you earn the generous cash back reward.

Discover also has other options for redeeming your cash back rewards. Instead of getting straight cash, you can get bonus gift cards. Some of these gift cards are worth almost twice the cash back that you have earned. So you can maximize your benefit by selecting a gift card from a retailer that you use on a regular basis. You can also credit your Discover account, or have your cash direct deposit into your bank account.

American Express cash back program

American Express also has a good cash back program (although not as good as the one offered by Discover). American Express offers very low interest rates on introductory purchases and balance transfers. Also, there is great online account access. You get 1% or 1.5% on all of your purchases, and you can find cards by American Express now that do not have an annual fee (all Discover credit cards come with no annual fee). American Express also has some cards and spending categories that offer 5% cash back (groceries, drugstores and gas stations are the most common for the 5% cash back). However, in order to take advantage of more generous rewards and a higher credit line, there are minimum income requirements to be met. Also, American Express comes with some other fees.

When a cash back card works for you

It is important to be careful when you get a cash back credit card. This is because the value of the cash you get back can be negated by interest rates if you carry a balance. If you get a cash back card, it is important to pay of your balance every month so that you are truly benefitting from the card's reward program.

You can maximize your cash back card if you set things up so that you are paying all of your expenses with one card. Put your bills and your purchases on the card each month, and then pay the balance. You still have to budget, and you have to be disciplined so that you are not carrying a balance. However, if you can work this, you can actually make money off of your cash back rewards card.

Carefully consider your options when choosing any credit card so that you are getting the card that works best for you.

Disclaimer: This content is not provided or commissioned by American Express.  Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express.  This site may be compensated through American Express Affiliate Program.



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