American Express vs. Discover: Which Offers Better Personal Loans?

When it comes to personal loans, American Express and Discover are two well-known financial institutions offering competitive products. Both companies are respected for their credit cards and other financial services, but they also offer personal loans with distinct features. If you’re trying to decide between an American Express and a Discover personal loan, here’s a detailed comparison to help you make an informed decision

1. Loan Amounts

American Express:

• Loan amounts range from $3,500 to $40,000.
• American Express personal loans are primarily available to existing cardholders, and the loan amount offered may depend on your creditworthiness and relationship with the company.

Discover:

• Loan amounts range from $2,500 to $35,000.
• Discover offers personal loans to a broader audience, including non-cardholders, with loan amounts that may vary based on creditworthiness and financial history.

Verdict: If you need a larger loan, American Express may be the better option, as it offers up to $40,000, compared to Discover’s $35,000 maximum.

2. Interest Rates

American Express:

• Interest rates range from 5.91% to 19.97% APR.
• Rates are fixed, meaning your monthly payment won’t change over the life of the loan.
• Rates are generally competitive, especially for borrowers with excellent credit.

Discover:

• Interest rates range from 6.99% to 24.99% APR.
• Like American Express, Discover offers fixed interest rates.
• Discover’s rates can be higher, particularly for borrowers with less-than-perfect credit.

Verdict: American Express typically offers lower interest rates, making it the better choice for borrowers with excellent credit seeking the most competitive rate.

3. Fees

American Express:

• No origination fees.
• No prepayment penalties.
• Late payment fees may apply, but these are standard.

Discover:

• No origination fees.
• No prepayment penalties.
• Discover offers a “30-day return guarantee,” allowing you to return the loan funds within 30 days if you change your mind, without interest or fees.

Verdict: Both American Express and Discover have similar fee structures, with no origination fees or prepayment penalties. However, Discover’s 30-day return guarantee offers an added layer of flexibility.

4. Loan Terms

American Express:

• Loan terms range from 12 to 36 months.
• Shorter loan terms may lead to higher monthly payments but lower overall interest costs.

Discover:

• Loan terms range from 36 to 84 months.
• Longer loan terms can make monthly payments more manageable but may increase the total interest paid over the life of the loan.

Verdict: Discover offers more flexible loan terms, ranging up to 84 months, making it a better option for borrowers who need lower monthly payments or more time to repay.

5. Eligibility and Application Process

American Express:

• Primarily available to existing American Express cardholders.
• The application process is straightforward and can be completed online.
• Pre-qualification is available, allowing you to check your rate without affecting your credit score.

Discover:

• Available to both Discover cardholders and non-cardholders.
• The application process is fully online and includes the ability to pre-qualify with a soft credit check.
• Discover may have slightly less stringent eligibility requirements compared to American Express.

Verdict: Discover is more accessible to a broader audience since it’s available to non-cardholders, whereas American Express personal loans are generally limited to existing customers.

6. Customer Service and Support

American Express:

• Known for excellent customer service, with a strong reputation for helping customers through the loan process.
• Offers 24/7 customer support.

Discover:

• Also has a solid reputation for customer service, with dedicated loan specialists available to assist borrowers.
• Provides 24/7 customer support.

Verdict: Both American Express and Discover are known for their high-quality customer service, so this category is a tie.

7. Additional Features

American Express:

• Loans can be used for various purposes, such as debt consolidation, home improvement, or major purchases.
• Existing cardholders may benefit from additional perks, such as rewards points or special offers.

Discover:

• Loans can also be used for a variety of purposes, including debt consolidation.
• Discover offers direct payment to creditors for debt consolidation loans, making it easier to manage and pay off your debts.

Verdict: Discover’s direct payment to creditors is a unique feature that may benefit borrowers using the loan for debt consolidation, giving Discover a slight edge in this category.

Conclusion: Which is Better?

• Choose American Express if: You are an existing American Express cardholder with excellent credit, looking for a loan with potentially lower interest rates and a straightforward application process.
• Choose Discover if: You are looking for a loan with more flexible repayment terms, a wider range of eligibility, or if you value the option to return the loan within 30 days without penalties.

Both American Express and Discover offer strong personal loan products, but the best choice depends on your specific needs and financial situation. Consider your priorities—whether it’s the loan amount, interest rate, term length, or special features—when deciding between the two.