Everything You Need to Know About the Discover Card
Everything You Need to Know About the Discover Card

What is a Discover Card?


Discover is a credit card brand issued by Discover Financial (DFS), an American financial services company.

Originally issued by retailer Sears, Roebuck & Co. in 1985 and introduced nationwide in 1986, the Discover Card was initially known for its reduced fee structure and pioneering cash-back rewards program. Discover has been an independent company since 2007.1. Today, Discover Cards is one of the most widely accepted cards in the world, along with Visa (V), Mastercard (MA) and American Express (AXP).

Central thesis

  • Discover is a consumer credit card brand known for its cash-back rewards program and reduced fee structure.

  • Discover Financial issues credit cards directly to customers, earning interest directly on their credit card balances without using an intermediary bank issuer.

  • Given its business model, Discover has an additional incentive to encourage its customers to borrow more heavily on credit cards than its competitors.

Discovery Card History

Discover was founded by a subsidiary of Sears in 1985 when many individual retailers and businesses introduced their individual business branded credit cards to their customers. Discover quickly stood out from the competition by charging no annual fee and offering one of the first cash-back rewards programs.

Discover initially grew slowly because few competing retailers were willing to accept the Sears department store card. Discover has gradually expanded its network and is now accepted at 99% of stores that accept credit cards and in 200 countries. As of 2021, Discover is the seventh largest card issuer in the world.

How the Discover Card Works

From a consumer perspective, the Discover card may be very similar to the cards offered by competing brands like Visa or Mastercard. Behind the scenes, however, there are some key differences between the way the Discover card works and its competitors.

We can see this by comparing Discover to Visa cards, for example. Visa simply licenses its brand name to the issuing bank, which then offers its customers Visa-branded credit cards, while Discover issues credit cards directly under its own brand.


As a result, Discover Financial earns interest income from its credit card customers and charges additional payment processing fees to merchants who accept the Discover card as a payment method. By contrast, Visa generates revenue through its payment network but does not benefit directly from the credit card balances of its end users. In this way, Discover’s business model is more like American Express, which is also a direct issuer.

With that in mind, it makes sense that the Discover card has historically offered attractive terms to attract new users, such as being the first major credit card brand to offer cash back rewards. After all, a company’s profitability depends not only on increasing merchant acceptance of credit cards (and transaction fees), but also on the average outstanding balance of cardholders.

Incentives that encourage customers to borrow more money using the Discover card, such as B. Given Discover Financial’s overall business model, it makes sense to increase the credit limit or waive the annual account fee.

Discover Cardholder Benefits

Discover offers cards that earn primarily cash back, as well as cards that offer general airline miles (Discover it Miles). Discover’s Cash Back Rewards program offers percent refunds on all purchases, rotating spending categories and merchants on eligible purchases up to $1,500 per quarter (1% thereafter) and 1% cash back on all other purchases for 5%.


Earn cash back rewards with the following Discover cards:

  • Discover Cash Back
  • Explore gas and restaurants
  • Find It Student Cash Back
  • NHL found it

Other Discover cards have different cash back award structures. The Discover it Chrome and Chrome Student Cards offer 2% cash back on restaurant and gas station purchases and 1% on other fees.

A unique feature of Discover cards is that they automatically match any cash back rewards earned in the first year, allowing savvy consumers to rotate the maximum 5% cash back category to get 10% off purchases in the first 12 months Cash back. This makes the first year of using the Discover card a great bonus for credit card converters.

Discovery Card Example

Suppose Mia is considering applying for a new credit card. As she researched her options, she noticed significant differences in the terms and features offered by different cards. For example, the plain vanilla card offers low fees in exchange for few, if any, rewards programs, while other cards, like Discover Financial’s Discover it Cash Back, offer more generous rewards programs and cash-back benefits.

While these differences can sometimes be explained simply by the different annual interest rates (APRs) and account fees associated with credit cards, Mia learned that these differences are also caused by the different business models of the major credit card brands.


While some, like Visa, make money primarily from transaction volume, others — like Discover Financial and American Express — also borrow money directly from cardholders. Because of this, companies that issue cards directly to customers have an extra incentive to offer rewards programs and other features that encourage customers to borrow more.

How do I make a Discover Card payment?

Since Discover issues cards directly to consumers, payments are made directly to Discover. You can do this by calling the number on the back of your card, sending a payment using the Payments section on your bill, or registering for Discover online and paying separately or setting up automatic payments.

Where is Discover accepted?

Discover is accepted in 99% of places in the US that accept credit cards. Internationally, Discover is accepted in 200 countries.

How do I apply to increase my Discover Card credit limit ?

Similar to American Express, because Discover is a direct issuer with a vested interest in making money from consumers with high debt loads and interest payments, Discover typically increases a customer’s credit limit without being asked. If you need to increase your credit limit immediately, you can call the number on the back of your credit card or log into the Discover website and select “Credit Card Services”, then under the “Account Services” tab, select “Increase Credit Limit”.

Is Discover a Visa or a Mastercard?

Neither. Discover is a completely independent card processing system accepted in many places in the world where Visa, Mastercard and American Express are also accepted.

Who owns the discovery?

Discover was originally owned by Sears and then by financial services firm Morgan Stanley, but has been an independent company since 2007.

Where can I find my Discover account?

Your Discover credit card number is the same as the Discover credit card number on the front of your card. If your physical card is not available, you can find your account number by logging into your online Discover account or by looking for your most recent paper statement.

Final result

Discover cards are widely accepted and offer competitive prices and rewards. With diligent use, Automatic Cash Back Matching offers rewards rates in the first year that are unmatched by other personal credit cards on the market today. Consumers should remember that a company like American Express, because it’s a direct issuer, makes money when customers have more debt and don’t pay off their balance each month. As with all credit cards, it’s important to understand your spending.

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Jake Smith

Escrito por

Jake Smith

He is the editor of Eragoncred. Previously, he was editor-in-chief of Eragoncred and a financial industry reporter. Jake has spent most of his career as a Digital Media journalist and has over 10 years of experience as a writer and editor.