Discover and Capital One: Top cards to consider
Capital One’s proposed acquisition of Discover has prompted some concern among consumers about what the landmark merger could mean for them. If approved, the $35.3 billion deal likely won’t be completed until late 2024 or early 2025, meaning that there will be few, if any, changes in the short term for current cardholders.
However, speculation about how the credit card landscape will change has already started. While it’s still unclear exactly how the merger will impact the credit card market long term, it’s safe to assume that Capital One and Discover card offerings may change as a result of the issuers joining forces.
With this in mind, let’s take a quick look at the key differences between Discover and Capital One, along with some of the top cards currently available from each issuer.
Discover vs. Capital One
Discover is an online-only bank that offers a variety of credit and banking products, including cash back, rewards and balance transfer credit cards. The issuer is especially popular among cardholders for its forgiving fees, generous rewards rates and lucrative welcome offer — Discover’s Cashback Match.
It also ranks highly among the top credit card issuers when it comes to customer satisfaction, consistently earning a top spot in J.D. Power’s annual U.S. Credit Card Customer Satisfaction Rankings. Discover charges very few fees — and sometimes none at all — for its credit and banking products, making them an accessible option for just about anyone. Most notably, Discover uses its own payment network, a fact that separates it from Capital One.
Capital One also offers competitive rates and rewarding credit cards to consumers of all stripes, boasting a rich portfolio of travel, secured, cash back and student credit cards. Many of the top Capital One cards have earned a spot on Bankrate’s list of best credit cards, and we recognized Capital One as the best big bank and best bank for ATM access in the 2024 Bankrate Awards.
Unlike Discover, Capital One does not have its own payment network, and instead relies on Visa or Mastercard.
Why did they merge?
Capital One boasts one of the highest credit card purchase volumes in the world at just over $600 billion, while Discover lags behind at around $220 billion, so you may wonder what Capital One has to gain from this merger. However, this move is part of a long-term plan that Capital One hopes will make it an even more powerful force in the credit card market.
In a press release, Capital One CEO Richard Fairbank said the financial institution’s acquisition of Discover “is a singular opportunity to bring together two very successful companies with complementary capabilities and franchises, and to build a payments network that can compete with the largest payments networks and payments companies.”
In other words, this merger could make Capital One less reliant on the Visa and Mastercard networks. Plus, Capital One’s purchase volume is substantial enough that if it were to move all of its cards onto Discover’s network, it would make Discover more competitive with American Express, Visa and Mastercard.
Capital One expects to add over $175 billion in purchase volume to Discover’s network by 2027. While that’s not enough to put Discover’s network at the top of the market, it could certainly bolster its current position.
Comparing top Capital One and Discover credit cards
Exploring top credit card offers is a key part of the process of applying for a new credit card. While there are no immediate changes to Discover and Capital One credit cards, here’s a quick recap of some of each issuer’s top cards by category.
Travel cards
Capital One easily beats out Discover when it comes to travel cards. Where Discover only has one dedicated travel rewards card, Capital One offers a wide variety of cards for occasional and frequent travelers alike.
Along with its entry-level Capital One VentureOne Rewards Credit Card, Capital One offers two premium consumer travel cards that carry valuable perks and boosted rewards rates. For many travelers, the mid-tier Capital One Venture Rewards Credit Card will be the best bet, offering a nice mix of rewards value and perks at a relatively low annual fee.
Here’s how the Venture card compares to Discover’s only dedicated travel card, the Discover it® Miles:
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The Capital One Venture and the Discover it® Miles are the closest match between travel cards from both issuers. The Venture card charges a $95 annual fee, so it’s less affordable than the no-annual-fee Discover it® Miles. However, the Venture card has a better rewards rate, more valuable rewards and a generous welcome offer.
On the other hand, the Discover it® Miles carries a still-decent flat rewards rate (1.5X miles), some redemption flexibility and a forgiving fee structure and APR. It also comes with an intro APR offer, which is missing on the Venture card.
Overall, the Capital One Venture is likely the better choice for frequent travelers since it not only earns more miles per purchase than the Discover it® Miles, but also offers more valuable miles. Bankrate values Capital One miles at 1.7 cents per mile, while Discover miles are worth an average of 1.0 cents each. This difference will likely help Capital One Venture cardholders offset the card’s annual fee and enjoy more value overall than they would with the Discover card.
If you’re set on avoiding annual fees altogether, you could opt for the Capital One VentureOne instead. While the VentureOne carries a lower rewards rate of 1.25X miles — less than the Discover it® Miles— it still earns valuable Capital One miles.
Cash back cards
Capital One and Discover both offer valuable cash back cards, but they’ll likely appeal to different types of cardholders.
Most of the value of Discover cash back cards comes from the issuer’s quarterly rotating cash back calendar, which gives cardholders a chance to earn rewards at a high rate in a variety of popular categories, instead of just a couple of static categories. In contrast, Capital One cash back cards typically offer a flat rewards rate or a few year-round bonus categories.
Because of these different earning styles, cash back cards between these issuers are rarely in direct competition with one another, but the Capital One SavorOne Cash Rewards Credit Card may have the best chance at outpacing the cash back potential on Discover’s top cash back credit card, the Discover it® Cash Back.
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The Discover it® Cash Back card is Discover’s flagship rewards card and offers a terrific rewards rate in its rotating bonus categories. The Capital One SavorOne also offers substantial cash back potential via its consistent everyday bonus categories, including groceries and gas.
Which card makes more sense will depend on your spending habits. The Discover it® Cash Back offers the most value to cardholders who can adjust to the issuer’s quarterly rotating cash back calendar. The card’s rotating calendar often includes everyday spending categories, but it may be harder to maximize year round if the bonus categories don’t line up with your spending.
Neither card charges an annual fee, so you won’t need to worry about offsetting initial costs, but you should evaluate your spending to determine if you spend reliably in some top, everyday categories all year. If you make consistent purchases at hotels, grocery stores, restaurants, and on streaming services and entertainment, then you might make the most of the Capital One SavorOne. If you enjoy strategizing about where and when to buy to maximize your rewards, it might be worth exploring Discover’s rotating calendar.
Although Discover doesn’t list its categories for each quarter far in advance, you can look at previous years’ quarters to see which categories typically pop up.
Balance transfer cards
Discover lands near the top of the best cards for balance transfers with the Discover it® Balance Transfer credit card (offer expired), making it a more viable issuer for balance transfers overall. Although Capital One offers intro APRs on many of its cards, Discover is known for offering longer intro APR periods and minimal fees.
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Both Discover and Capital One have solid balance transfer cards, the Capital One Quicksilver Cash Rewards Credit Card and the Discover it® Balance Transfer. When looking for a balance transfer credit card, you should look beyond the intro APR as a rule. Although the intro APR is the most important aspect of a card like this, how the card fits into your wallet beyond that period is also important.
The Capital One Quicksilver, although not a dedicated balance transfer credit card, offers the same generous intro APR for both purchases and balance transfers. Although its purchase intro APR is longer than the Discover it® Balance Transfer’s offer, it has a higher ongoing APR. If you can’t pay your balance before the end of your intro period, you’ll be left paying interest at your ongoing rate. A high APR could undo a lot of the savings you accrued during your intro period.
Beyond the intro APRs on both cards, the Discover it® Balance Transfer carries much higher cash back potential because it has the same cash back program as the Discover it® Cash Back card. Many cardholders may struggle to outpace Discover’s boosted rotating categories with a flat-rate card.
Credit-building cards
Discover has made a reputation as an issuer with forgiving fees and accessible banking services, including credit cards like secured cards. It’s no question that the Discover it® Secured Credit Card is one of the best secured credit cards, but the Capital One Platinum Secured Credit Card could be a viable alternative.
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The Discover it® Secured offers credit-building cardholders nearly as much value as one might find on a cash back credit card. It has a welcome offer, tiered rewards and an intro APR offer. This places it far ahead of the Capital One Platinum Secured, which offers none of these.
The Capital One Platinum Secured only requires a minimum security deposit of $49, but can still provide cardholders access to a $200 credit limit. The minimum deposit for the Discover it® Secured is $200 for the same credit limit. The Platinum Secured is a more accessible option in this regard, but it doesn’t carry nearly as much value. Plus, a $200 credit limit gives you very little room to use credit without hurting your score.
If you choose either of these cards, you should aim to deposit as much as possible to open up your credit limit. That said, the Discover it® Secured beats the Capital One Platinum Secured because it offers much more to cardholders than the Platinum Secured does.
Student cards
Student credit cards are often simplified versions of better credit cards with lower rewards rates, higher fees and less stringent credit score requirements. Capital One and Discover both offer fairly lucrative student cards that rival the cash back potential of each issuer’s best cash back cards.
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The Capital One SavorOne Student Cash Rewards Credit Card is nearly identical to the non-student version of this card, the SavorOne Cash Rewards Credit Card. It has the same rewards rate and categories but doesn’t have the intro APR offers. It also has a lower welcome offer. Because this student card compares so well to a high-end cash back card for users with good to excellent credit, it’s worth looking into.
Similarly, the Discover it® Student Cash Back card is almost the same as the Discover it® Cash Back card, rewarding cardholders with the same cash back rate on Discover’s quarterly rotating cash back calendar. Plus, this Discover it® Student Cash Back also has the same welcome offer as every other Discover credit card — the Discover it® Cashback Match. This welcome offer gives Discover’s card a higher potential value than the Capital One student card for your first year’s spending.
Additionally, the Discover it® Student has an intro APR on new purchases and balance transfers and a lower ongoing APR. Either card is a great choice, but the choice between the Capital One SavorOne and the Discover it® Student cards will come down to how and where you spend your money. The Capital One card will be great for students who spend frequently in everyday categories. The Discover it® Student Cash Back will be a better choice for student cardholders whose spending aligns with Discover’s quarterly rotating calendar.
The bottom line
There are several cards from both Discover and Capital One that you should consider if you’re looking for a new credit card.
Discover is one of the best issuers when it comes to low rates and fees, and most Discover cards have the potential to earn a welcome offer that outpaces the welcome offers on many of the best rewards cards. Capital One, on the other hand, offers consistent everyday value with several of its credit cards. Its cards are great for your typical spending, while Discover’s cards are likely a better fit if you enjoy strategizing about where and when to buy to maximize your rewards.
The Capital One and Discover merger may eventually shake up the credit cards landscape quite a bit, and it’ll be interesting to see what key features of both issuers’ cards will remain when the dust has settled. Although some features could go by the wayside, there may be new perks and features that Capital One offers once it has integrated its payment network.
