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Update: Discover Deals is no longer available as of November 1, 2018.
Discover isn’t highly regarded by points and miles enthusiasts, but there are good reasons to have one of these cards in your wallet. Today, TPG Senior Points & Miles Correspondent Jason Steele describes a new card from Discover with a bonus offer that deserves your consideration.
Whenever I ask someone about why they use a Discover card, I get an earful about the quality of the product and superior customer service. Although Discover does consistently end up at the top of J.D. Power’s credit card customer satisfaction surveys, the cards don’t provoke much more than yawns from award travel enthusiasts.
However, it might be time for another look. Discover recently released a new version of the Discover it card called Discover it® Miles, which offers high returns during your first year as a cardholder, and still strong value thereafter.
How this card works
For each dollar spent, you earn 1.5 miles in Discover’s rewards program. Like the Capital One Venture Rewards Credit Card and the Barclaycard Arrival Plus World Elite Mastercard, Discover labels rewards from this card as “miles” to imply that it’s an alternative to co-branded airline cards that offer frequent flyer miles. Like its competitors, each mile in Discover’s program is worth one cent as a statement credit toward qualifying travel expenses. For the most part, that’s where the similarities end.
What’s getting headlines for Discover it Miles is that you earn 1.5 miles per dollar spent and all of the miles you earn with this card within the first cardmember year are matched at the end of that year. That means you’ll earn 3x miles on all of your purchases, so long as you remain a cardholder in good standing for 12 months. That’s a very strong return for a card with no annual fee.
Another exclusive benefit of the Discover it® Miles card is a $30 annual in-flight WiFi statement credit (based on the cardholder anniversary, not the calendar year). The Business Platinum® Card from American Express Open also offers a $30 annual in-flight WiFi credit, although the Amex benefit only applies to GoGo services, while the Discover benefit applies to any service provider.
I spoke with Julie Loeger, Discover’s Senior Vice President of Brand and Acquisition, in order to learn about Discover it Miles and clarify some of the nitty gritty. She stressed that “Loyalty goes both ways” when it comes to the Discover card. Considering how this card is branded, and that it appears to be a direct shot at other cards that offer airline frequent flyer miles, it’s not hard to read between the lines, especially considering all the high profile devaluations that have occurred recently among airline programs.
In addition, she was also able to clarify a few key points about this card:
1. Does the introductory double miles offer count for Discover Deals?
Yes! One of the first questions I had was whether the matching of miles in the first year would count for miles earned from the Discover Deals portal, and she confirmed that those miles are eligible to be doubled.
2. What can miles be redeemed for?
Miles are worth one cent each as statement credits toward travel purchases, which Discover defines as “airline tickets, hotel rooms, car rentals, travel agents, online travel sites, and commuter transportation.” To see how this compares to other products, check out my post on How Credit Card Issuers Classify Travel and Dining Purchases.
Discover miles can be redeemed for travel purchased within the last 180 days. However, these miles can also be redeemed for cash back, so there’s really no point in parsing out what counts as travel and what doesn’t.
While you can use miles for travel statement credits or cash back, you do not have the option to redeem your miles for gift cards. This is unfortunate, since some of Discover’s gift card redemption options have occasionally returned more than one cent per point in value.
3. Can you get the Discover it Miles card if you already have another version of the Discover card?
Yes! Discover is currently accepting new applications for the Discover it card, even from existing Discover customers. Later this year Discover expects to have the capability to convert existing accounts to Discover it Miles so that cardholders won’t even have to fill out a new application.
Other Discover card benefits
Part of why Discover enjoys so many raving fans is its customer service, which is answered by 100% US based representatives. Additionally, Discover automatically waives your first late fee, and never imposes a penalty interest rate. Discover also offers a free FICO credit score on monthly statements, as well as online and on its mobile app.
So what’s not to like? The most prevalent drawback is that your Discover card might not be as widely accepted as cards from other payment networks, especially overseas. In the US, Discover is known for having very low merchant fees, which has resulted in widespread acceptance. Outside of the US, Discover is accepted anywhere China Union Pay, JCB (a major Japanese bank), and Diners Club International are accepted. In addition, it’s now much more widely accepted internationally than it used to be, as you can see from its Country Acceptance Map.
Nevertheless, some countries such as France and Chile that jump out as me among the Discover Card dead zones, and it’s unclear what Discover’s actual penetration is in some of the countries listed as having some participating merchants. Thankfully, there are no foreign transaction fees with Discover it Miles or any of the other Discover cards.
How to maximize this card
The double rewards earned during the first year is a great reason to try this card, as there’s nothing else like it that will offer 3% back in travel statement credits (or cash back) on all charges. Frankly, it’s not easy to consistently realize a 3% return from co-branded airline and hotel credit cards, but at the very least, you could use the travel statement credits to cover any remaining taxes and fees imposed on award travel redemptions.
With a 3% return, this is also a quick and easy way to pay your taxes, as you can do so for a fee of 1.87%, and come out ahead by 1.13%. This would result in a net gain of $56.50 on a tax payment of $5,000. See my post on Paying Taxes with a Credit Card to Earn Travel Rewards for more details.
I would also keep a very close eye on the Discover Deals, which are normally pretty good, but can be fantastic when those rewards are doubled.
After the first year, when the rewards dial back to a more standard 1.5%, this card will still continue to offer plenty of value. The $30 annual airline WiFi credit is easy money, especially since the card has no annual fee. Furthermore, I would consider using this card for certain purchases that would qualify benefits like price protection, purchase protection, and delayed baggage reimbursement.
After not aggressively pursuing the travel rewards market for many years, Discover is looking to make a splash. Doubling cardholder rewards for the first year is a strong move, and I think this product deserves the attention of award travelers as a solid everyday option when other more lucrative bonuses aren’t available.
The American Express Platinum card has some of the best perks out there: cardholders enjoy the best domestic lounge access (Delta SkyClubs, Centurion Lounges, and Priority Pass), up to a $200 annual airline fee credit as well as up to $200 in Uber credits, and mid-tier elite status at SPG, Marriott, and Hilton. Combined with the 60,000 point welcome offer -- worth $1,140 based on TPG's valuations -- this card is a no-brainer for frequent travelers. Here are 5 reasons you should consider this card, as well as how you can figure out if the $550 annual fee makes sense for you.
- Earn 60,000 Membership Rewards® points after you use your new Card to make $5,000 in purchases in your first 3 months.
- Enjoy Uber VIP status and free rides in the U.S. up to $15 each month, plus a bonus $20 in December. That can be up to $200 in annual Uber savings.
- 5X Membership Rewards® points on flights booked directly with airlines or with American Express Travel.
- 5X Membership Rewards points on prepaid hotels booked on amextravel.com.
- Enjoy access to the Global Lounge Collection, the only credit card airport lounge access program that includes proprietary lounge locations around the world.
- Receive complimentary benefits with an average total value of $550 with Fine Hotels & Resorts. Learn More.
- $200 Airline Fee Credit, up to $200 per calendar year in baggage fees and more at one qualifying airline.
- Get up to $100 in statement credits annually for purchases at Saks Fifth Avenue on your Platinum Card®. Enrollment required.
- $550 annual fee.
- Terms Apply.
- See Rates & Fees