Do you have a rewards credit card with Capital One or Discover?
You’ve probably had questions amid Capital One’s acquisition of Discover, such as:
What does this mean if I’m a Discover customer?
What will the transition process look like for me?
Will I lose some of my favorite Discover perks?
Will there be changes to my Capital One credit card?
Money expert Clark Howard has fielded several questions about the future of these brands since the acquisition announcement.
But now that Capital One wholly owns and fully controls Discover, people are receiving notices that their Discover accounts are migrating to the Capital One platform and that select Capital One cards are moving to the Discover network.
And that’s creating more questions.
In a recent episode of The Clark Howard Podcast, a reader raised one of the more common questions: How will all of these changes impact my credit card mix?
Let’s look at how Clark says this can affect your credit card mix, an important ingredient in a good credit score.
Ask Clark: How Does Capital One’s Acquisition of Discover Impact My Credit Card Mix?
Pete in Nevada asks:
“Hi Clark, I have two credit cards: one Visa and one Discover. My Visa started out with a credit union, but over two mergers, Bank of America now owns it. My Discover used to be independent, but was acquired by Capital One. I think I want to get a third card. My credit score is 828, and I want to know if Capital One should be considered, or would that now be considered a second Capital One card?”
Clark responds:
“OK, so I’ve always said you want at least two cards from two different issuers. You already have that. If the best offer out there is another Capital One, it is OK to do it because you’re with Bank of America and Capital One. So if one of them has a bad day and gets rid of you, you still have credit with someone else. I mean, you could go to a third issuer. You could even go to another credit union that actually issues their own credit cards, but that’s more and more rare.”
Breaking Down What This Means for Your Wallet and Credit Score
It’s no surprise that Clark pointed Pete toward his “Noah’s Ark” rule, which is featured prominently in his 7 rules for using credit cards.
The basic premise is this: You need at least two credit cards from two separate issuers to ensure that you don’t get your credit line slashed or canceled altogether by one institution’s decision-making.
This Capital One-Discover acquisition has created some confusion when it comes to adhering to this rule for a couple of key reasons:
Discover credit cards are now issued by Capital One.
Some Capital One credit cards now carry a Discover logo.
The simplest way to think about this is: All Discover and Capital One credit cards are now issued ONLY by Capital One.
There are no longer credit cards issued by Discover Bank. Instead, Capital One will be servicing Discover-branded credit cards while also using the Discover Network for card processing on select Capital One-branded credit cards.
If you had a Capital One card and a Discover card, you now have two credit cards that are issued by Capital One. So you went from two issuers to a single issuer, which could create a need to consider a third credit card to get you back to two separate issuers.
If you had just a Discover card, you effectively now just have a Capital One credit card. Any new Capital One cards that you add in addition to having the Discover card would mean that you now have multiple Capital One credit cards.
How Does This Impact My Credit Score?
If you’ve been a long-time Discover cardholder, you may be worried about how this migration to Capital One will impact your credit score.
After all, things like the age of credit cards and the number of open credit accounts can have a direct impact on your score.
The good news is that you’ll get to keep your payment history from your relationship with Discover even though Capital One will be your credit issuer reporting to the bureaus moving forward.
Capital One says the following in its FAQ for Discover customers migrating to their platform:
“This change won’t be reported as a new account, and your account open date will appear as the same date currently reported on your credit file. The credit bureaus will continue to receive updates based on your ongoing account performance.”
Capital One also says the name on the credit file may change to “Discover by Capital One” or simply “Capital One.” It warns that can trigger credit-monitoring alerts even though it is not a new account.
I encourage you to check out that FAQ page if you have more concerns about this migration. It answers many of the most common questions Discover customers have about the changes to their service.
Do you have a Discover card or bank account? Where are you at in the Capital One migration process? We’d love to hear from you in the Clark.com community.
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