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Bailout MONEY
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Discover reaches for bailout funds

By: Steve Daniels Dec. 18, 2008

(Crain's) — Discover Financial Services Inc. is joining the growing ranks of firms reaching for federal bailout dollars.

Discover has applied to sell up to $1.2 billion of preferred shares to the federal government and to become a bank holding company, reversing its previous position that it likely would not participate in the Treasury Department's financial rescue program.

The Riverwoods-based credit-card issuer disclosed its about-face in its fourth-quarter earnings report today. In a conference call with analysts, CEO David Nelms characterized the decision as a prudent response to deteriorating economic conditions.

"We're positioning Discover to be one of only a handful of winners in the payments industry," he said.

In seeking to convert to a bank holding company, Discover is following the lead of the other big stand-alone credit card issuer, American Express Co., which opted to convert to a bank earlier this year. Assuming the Federal Reserve approves the application, Discover will become the second-largest bank holding company in the Chicago area, after Northern Trust Corp.

Mr. Nelms declined to disclose how much Discover asked for in equity from the Treasury Department. If it were a bank holding company today, Discover would have risk-weighted assets of $40 billion; that would put it in line for between $400 million and $1.2 billion in federal funds. The company hopes to receive a response to its application by yearend.

Discover executives emphasized that the company is well-capitalized without a federal infusion, even as it's writing off more consumer debt each quarter and expects write-offs to grow next year. It also is funding the vast majority of its loans through deposits, which have grown an average of $1.6 billion per month over the past six months.

"We think (becoming a bank holding company) is consistent with our conservative approach to managing the business," Mr. Nelms said.

But the consumer spending meltdown is hitting Discover's bottom line. The company posted fiscal fourth-quarter earnings of $444 million, or 92 cents per share, from continuing operations. Discover would have suffered a loss without $535 million in after-tax proceeds in the quarter from its $2.75-billion antitrust settlement in October with Visa and MasterCard.

Net charge-offs of delinquent accounts were 5.48% of Discover's managed loans in the fourth quarter, up from 5.2% in the third quarter. Mr. Nelms said he expected the first quarter charge-off rate to exceed 6% and couldn't predict how high write-offs would go after that.

"We cannot predict the U.S. economy and the state of the consumer with a great deal of certainty," he said.

Other large card operations, like Bank of America Corp. and Citigroup Inc., are reporting higher charge-off numbers than Discover, and industry analysts are predicting that overall loan losses in the industry could be a record in 2009.

Do you think they are COMUNIST BASED? Think about it getting tree money and then borrowing your own tax dollars back to you at more than 12% interest. Do You think that is a part of COMMUNISM? Write a comment back.

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Better Watch Before Applying For Discover Card - Just Fake And Worst Customer Care
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CHICAGO, ILLINOIS -- Yesterday I've applied for the Discover More credit card, impressed by its reviews and my credit card application was rejected. This is the second time my application was rejected for a Discover More Card. I know Discover more card is tough to get and has many favorable reviews. I have a 750+ FICO credit score and tried to get my hands busy with it.

(FYI I have 4 revolving credit accounts, 2 with WAMU, one with BOA, one with Citi Cards). After my first attempt (Jun '08) went in vain I thought it would be better to give it a try after a long period. Yesterday when my application was rejected, I thought it would be better to probe out the cause and to know if the card is not meant for me either. I've called the customer care number probe out for details, the representative was so eager to end my call saying "you should get a letter through mail." I asked her if she could let me talk to concerned department.

I was put on hold for sometime and another representative came into line, this time she's mentioned that "your credit history was not good". I've reminded her my credit score was 750+ and this was the first inquiry in the past 8 months. She put me on hold and diverted my call to Delaware operations. This time for a change I was speaking to a representative of senior level for a change and he was keen to end my call as well, citing just "bad credit". I've asked him if he could probe out what was the cause of rejection if he could find anything on report.

His reasons were my credit history was fairly young. I've maxed out on my other cards (it's a complete lie; in-fact my credit card balances were almost less than 30% of my actual credit line). I've many credit cards and might be a potential defaulter. (I've never missed any of my due-dates for any card so far and my running balances were never maxed out ever on any card.)

I've asked him if there's any such rule with the company that YOUNG 750+ credit histories would be considered as a potential threat (his answer was no) and reminded him that my credit cards balances were not as he has mentioned and asked him if he could be able to tell me the possible cause for rejection in a second row. He's just repeated the same sentence "BAD CREDIT HISTORY" and went silent when I tried put some conversation and said that he can't hear me good enough (bad line; but the line was crystal clear) and tried to ask if I had any other questions if not so he could end the call.

I don't think this is the kind of service I expect from a operations manager from a department or neither is the valid reason for denial. I don't know much if the Discover Card is really that great to have or worth another inquiry. I make 70k+ per year and has never defaulted for any credit or was behind on paying interest or never maxed out my credit limit.

One thing for sure that it makes me feel Discover card is another nuance for worst customer service. I wouldn't be applying or this card at all. I am happy with my AMEX BLUE CASH account and wouldn't be suggesting anyone for a Discover More Card. I wish I could show the one finger gesture with the two word sentence.

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Discover Predator Creditor - Do Not Use
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My Discover card adorns my bottom sock drawer and will continue to do so for the foreseeable future. I receive "offers" from Discover cluttering my junk mail 'round file' at least 4 times a week containing blank checks (a dangerous practice at best) attempting to lure me into limited-time low interest balance transfers and high ticket purchases, and still more "offers" related to bogus cash back bonuses, etc. The main reason I will not use the Discover card (which I have had since 1994 and previously did use) is their ridiculous and unrealistic interest rates. My credit score is 720, and no other creditor charges me as much as Discover.

I have called them several times in response to their offers and suggested if their rates were better, I'd be more likely to return as a customer, and the best they offered me about 3 months ago was 18%. I checked out Discover at Wikipedia and here is what the article had to say: "In the latter part of 2007, Discover Card began raising interest rates on many of its longer-term customers, typically to the Prime Rate plus 14.74% (which in October 2007 equated to a 22.99% annual percentage rate).

Customers who request the reasons in writing for the decision are notified that the increase is based on any (and not necessarily all) of the following characteristics: Account open longer than 12 months, APR less than 20.00%,
Account not used monthly". Today I received a form letter, ostensibly from the Sr. VP, thanking me for my phone call and again offering me various cash back bonuses (mostly for online services for which I am CERTAIN they receive a kickback from the vendors), but again, no offer of a reasonable interest rate.

This was my response (name excluded due to TOS): "I appreciate your form letter of (no date 2008) offering what you perceive as incentives to use my Discover card. Since you care so deeply about my opinion and needs as a cardholder, please allow me this opportunity to share them. What cardholders need is reasonable interest rates. We don't need silly cashback bonuses and online shopping with vendors who pay you a kickback. We need lower interest rates. The current financial times demand it. I assume you read a newspaper recently. My VISA card charges me 10.99% annual percentage and my Mastercard charges me 8.9%.

These are not introductory rates either, they are the actual APR for these cards (introductory is 5.9 and stays that low for the LIFE of the loan, not just a few months), and have been for at least 5 years. I have a credit limit of $15,000 on each of these two cards, so no silly little cashback bonus is going to be any kind of incentive for me to pay you upwards of 18% to use my Discover card. In fact, by paying OFF c(p)reditors like you and shifting my remaining debt to these permanently low interest cards, I have improved my overall financial standing tenfold.

As a result, I will actually be able to buy my own home, at a reasonable fixed rate mortgage (no phony "zero-down" scams), in about 18 months from now, once the mortgage and banking industry stabilizes. Of course, were it not for predatory lenders and greedy ridiculous interest rates forcing people to default, said instability would never have occurred.

I imagine (and hope) the shockwave will "trickle down" to lenders like yourself as well in the near future, and when it does, and when you realize you can only stay in business by charging a fair and reasonable interest rate, then maybe I'll take the Discover card out of my sock drawer and consider using it." Sincerely, a very happy NON user of your services NOT lured into financial ruin by false promises of "rewards" and the American Dream of home ownership (in other words, NO FOOL, and proud of it).

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Complaints
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OK, I have to respond. I have worked for Discover and some of the "reviews" are just so unfair and basically nothing but whining. I can tell you first hand that Discover trains its employees to take care of the customer. EXTENSIVELY TRAINS. People have such unreal expectations these days it's amazing to me. A few replies to other reviews:

"Discover is the only company with a special division whose focus is to deter consumers from canceling their cards." Is this a joke? Every credit card company has one. However if your business is not profitable to the company your acct can be statused to be closed front-line without being transferred. Maybe these other companies you speak of didn't care enough about your business to try to take care of fixing the problem and keeping you.

"I asked a for a copy of the recording and he thought that was real funny and said I would never get a copy of that. I said then how do I know that you (Discover) even said that?" The recordings are not for you. And FYI, each rep takes about 120 calls per day. And there are literally thousands of reps. Do you have any idea how hard it would be locate one specific conversation?? Not every call is recorded and definitely not done to prove a point to you. These recordings are for training and legal purposes.

"On October 7, 2007 I accepted an offer for a $25.00 dollar gift card to RED LOBSTER restaurants for $20.00 out of my cash back bonus on my Discover Card. Sounds like a good deal, right? Well it is now April 28, 2008 and I have not yet received said gift card and they will not put my $20.00 back into my bonus plan. Can you say RIPOFF!" Who waits 7 months to call and complain about not getting a gift card? And PS, you can get your money back, call again and ask.

"My credit Score is Excellent. This is my very first time with a denied credit card application. (Hard on the ego??) I posted two months ago an application to Discover Credit cards. Today I received another letter to advise that my application could not be approved. Apparently my ethnicity/origin is important to them since I am Hispanic." GIVE ME A BREAK! I got a call from someone going nuts because she had an "excellent" score too! 600! That's not even an average-risk level.

I have no idea what your score is but there are PLENTY other considerations for determining if you get a card. First off, DC is not Visa - who will give a 10k limit to anyone with a pulse - and yes, it's a little harder to get. But to say that it's because of your ethnicity is completely ridiculous. It's a BUSINESS to make money. They don't care if you are a green-skinned-Martian. If you look profitable on paper, you'll get a card. Get a credit report.

"Years ago my sister had a Discover credit card. When I turned 18 she put me on the account to help build up my credit. (And just as a side note, I never used the card.) She suffered a physical & mental breakdown a few years later and had to stop working. She filed for bankruptcy and the Discover card was included." (This goes on about it hurt her credit and how horrible DC is for doing that to her) Although I sympathize with this one, I still would like to make a point. If you are an Authorized Buyer on an Acct you can be removed with a click of the button and even request to have the credit trade line removed.

If you signed a Joint Card member agreement to help your credit then you signed a contract taking responsibility for the card. End of story. You made a choice and DC, or any other card for that matter, cannot go in and say, "never mind, you aren't responsible." A) that's not fair to the company you were trying to get good credit out of, and B) It's Illegal to change how you are reported to the credit bureau just cause you don't like it. It's not like DC makes money off reporting you.

**Bottom Line** Take a little responsibility for your financial decisions. You can choose to pay off your card every month and never pay a dime in finance charges AND still earn money from the company for Cashback Bonus OR you can build up your debt, become delinquent on your acct and have your rates raised (because, hello, it's a LOAN and you are becoming a huge risk to the company) and then cry about how unfair and "predatory" the company is. It is spelled out in the agreement that you fulfill your end, and we fulfill ours.

People want to be late or skip a payment and have no repercussions. Truth be told, although I am admittedly biased, DC is an awesome company that sincerely tries to please its customers. If you call in yelling and screaming and demanding, you're right, you probably won't get helped as much. But 9 times out of 10, we will bend over backward to help be it reinstating rates, adjusting fees, and giving you back money for using the card. Discover is awesome.

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Discover Cards Lack of Help
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VERMONT -- Regarding: USA Photo Nation, 1554 61st Street, Brooklyn, NY 11219. Also known as: USA Photo Nation, Ltd., 164-15 Jamaica Avenue, Jamaica, NY 11432. Also known as: Best Price Camera. On October 17, 2006, I purchased a Sony DCR-SR100 camcorder, wide angle lens, UV filter, and 8 hour rechargeable battery, also USA Photo Nation gave me a free camera case. The sales person said that USA Photo Nation would send me the best wide angle lens they had.

I received a Sony DCR-SR100 camcorder, wide angle lens with a value of about $25 retail, UV filter that did not thread on my camcorder correctly, a 2 hour rechargeable battery instead of an 8 hour and a camera case. Also when I tried the wide angle lens on my camcorder and it was like looking through a coke bottle clipping the corners of the video frame. I phoned USA Photo Nation and told them and they gave me an RMA return authorization number, they said I could keep the 2 hour rechargeable battery.

(Posting 1) I returned the wide angle lens and UV Filter. I received back a box with just an empty wooden lens box in it, no wide angle lens, no UV filter and no 8 hour battery. I phoned USA Photo Nation about the mistake and they said that they would send me what I ordered. "Package came but you forgot to send the UV filter." Also the wide angle lens is the exact same one as they sent the first time and I told them it did not work correctly in my camera.

I took my camcorder and wide angle lens to a professional camera shop and tried one of their wide angle lenses in my camcorder and it worked just fine. The sales person told me that USA Photo Nations wide angle lens was not worth the price I paid.

I phoned USA Photo Nation telling them about the problem and they gave me the royal runaround, finally they said they would not give me an RMA number and they would charge me a 15% restocking fee. I was told by the person on the phone that I was playing games with their company regarding this issue. Why would I do such a thing? When the only thing I want is the merchandise I ordered and not all the runaround.

(Posting 2) I sent the wide angle lens back for a replacement; after I sent it I noticed they also sent me the wrong battery, the battery they sent was a Power 2000 that is too large to fit my camcorder. (Posting 3) I sent the battery back using the United States Postal Service but this time with a signed confirmation but U.S.P.S. delivered the package Friday afternoon and they were closed Friday afternoon and all day Saturday, now it is up to USA Photo Nation to go to the post office to pick it up but to this date they have not done so.

I have been in contact with your Discover Card Dispute Department [name removed], but he said USA Photo Nation is claiming that they did not receive back any merchandise from me but I have confirmation slips from the United States Postal Service that prove else wise, but [name removed] said the U.S.P.S. confirmation slips only shows that they were delivered to Brooklyn New York and do not show the full mailing address but I pointed out that the post office did not include my full mailing address when they sent the parcel to me either. [name removed] accused me of sending the merchandise to a friend in Brooklyn New York.

Discover Card even closed my case just on the words of USA Photo Nation. I happen to be a Christian of very high standards and it would be against my Religion and my God to lie to them or anyone. I have also been in contact with the United States Postal Service regarding this issue and the manager gave me the U.S.P.S. policy.

I faxed them to Discover Card Dispute Department care of [name removed] but with no results they are still taking the side of USA Photo Nation. [name removed] told me that I could have sent the packages to a friend in Brooklyn New York. Items I do not have in my possession are: 1) wide angle lens (Advertised value of $249.99), 2) UV filter. (Advertised Value of $39.99).

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Lower Interest-Rate
StarEmpty StarEmpty StarEmpty StarEmpty StarBy -
Rating: 1/51

FAYETTEVILLE, NORTH CAROLINA -- I decided to call on my credit card companies due to the virus, because at work hours are being cut, they flatly said no. Always paid my account on time. Credit card companies are Actually working with consumers, but this company refuses to work with their customers.

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Complain ALSO to the NEW Consumer Financial Bureau - Mulvaney !
StarEmpty StarEmpty StarEmpty StarEmpty StarBy -
Rating: 1/51

USA, UTAH -- These people are all about: Them, Them, Them....."like it or lump it", Because WE said so! Get a grip. Read all the fine print and then find out how many deceptions you have been given...how many claims they make and have no resources they have to provide them (Dementia) Liars.....traitors, "Banker Rules", They Don't Care, PERIOD! Just keep on sharing your rightful detailed experiences and they will destroy themselves. God Bless America!

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Turn me down
StarEmpty StarEmpty StarEmpty StarEmpty StarBy -
Rating: 1/51

PHOENIX, ARIZONA -- Discover card sucks every time apply They turn me down they sucks

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I Would Like To Complain About Discover Card Customers
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I work for Discover Card. I talked to all types of customers all day long and prior to popular belief we probably talk to a lot more rude customers than you probably talk to rude reps. I have some advice and complaints. When you call and want to know why your interest is 28.99% and I look at your history and you have been late 11 times in the last to years... Please, please do not say "Well by how many days?" I don't care how many days late you were if you are ONE day late than your late. We give you at least 25 days to pay your bill and the feds only require 21!

Please do not call up and tell us we are GOING to do something. You know what we want to do at that point and probably will do. Nothing. We are people to! We are husbands, wives, kids, students, workers, and yes consumers and we probably all have credit cards. Not even just dare I say Discover Cards.

I had a very rude customer call up today saying, "I don't care what your name is. I am going to tell you that you are going to remove this late fee and remove it now." When I politely asked him to bare with me while I review his account he yelled at me, he doesn't care what I do but I was GOING to remove that late fee. I removed it because I believe Discover Card is a good company not because he yelled at me and he had never been late before. You get more with honey than you do with vinegar.

At your job if someone is rude to you how do you feel? I am a strong believer that you do unto others as you would have done unto yourself. That's why I removed the fee because I know if I called and I had only been late once I would hope someone would remove the fee for me. Now here is a secret if you have never been late before and you have good payment history we will always remove the fee the first time. Second offenders are not also so lucky.

But honestly guys, if you're digging yourselves in debt holes or treating us (customer service reps everywhere) like robots not people, how do you expect us to be able to do anything or want to do anything for that matter? Just food for thought...

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Good Riddance to Bad Rubbish
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I too was a loyal Discover Card user until recently. Back in Feb. 2009 I called Discover up and requested a lower interest rate. I cannot remember my original rate but my friend had a lower rate on his Discover Card and I have a good repayment history with them so I thought I would ask. My wish was granted, it was lowered to 13.49%, not awesome but better than I had before. Then about 6 weeks later I received a letter from Discover that my rate was going to increase to 19.99% and unless I closed my account this was just how it was going to be. Their reason was the current economy and their increases in the cost of doing business.

I reviewed my records and thought this must be a mistake, I have never been late or missed a payment and I used my card frequently, so I called them up. I asked the representative how doing this could be good for their business because I will be closing my account and I would imagine chasing the good customers away would not improve their profitability. I got some canned response and she did not even try and get me to change my mind, or talk to a supervisor to see if they could reconsider, nothing.

It was very clear to me that this is not the type of company I care to give my business to so I promptly wrote a letter to them requesting they close my account and I transferred my balance to another credit card. I realize I may have just hurt my credit score by doing that but I was angry and not willing to put up with their bullying ways. Consumers need to fight back, those of us that still have a home and a decent credit score have to fight even harder today to keep it. I am tired of our government and our creditors trying to force us to pay for the mistakes of others. Spread the word, save your friends and relatives from predatory companies.

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1.5 out of 5, based on 16 ratings and
100 reviews & complaints.
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Discover Card
Attn: Complaints
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