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:
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.
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.
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.
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.
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.
