Discover has added a new member of the ‘it’ family — the Discover it® Miles, an alternative to the issuer’s existing cash-back cards (which offer 5 percent back or 2 percent back, depending on the card you have). So does this new addition outshine its older siblings (and similar cards on the market)? Read on so you can decide for yourself.
Getting the card
According to a Discover spokesperson, Discover began accepting new applications only for the it Miles card when it was initially released back in early 2015. In other words, you couldn’t product-change from an existing Discover card yet. Whether that is still the case is unclear, but it never hurts to ask. However, if you already have a Discover account and would like to also open the it Miles, keep in mind that you can be the primary cardholder on two Discover cards simultaneously. However, your first account must be open for a minimum of 12 months before you can apply for the second. As these two accounts would be separate, you would have separate rewards balances, not a pooled one.
Benefits and rewards in a nutshell
The card is being marketed to travelers and offers fixed-value “miles,” which you can redeem for a statement credit for recent travel expenses. That puts it in the category of general-purpose travel cards like the Capital One Venture (and Venture One), the Barclaycard Arrival (and Arrival Plus), the BankAmericard Travel Rewards card and the Blue Sky card from American Express (a CreditCardForum advertising partner). You may remember the now-discontinued Miles by Discover card, but this new product is quite different.
Here’s a run-down of the card’s defining features:
- No annual fee
- 1.5 miles per dollar spent: Remember, these are generic miles you’ll cash in for statement credits – not miles tied to a specific airline.
- Following your first 12 consecutive billing periods, you’ll get a bonus equal to all the miles you earned during those billing cycles. Note that this benefit is one-time only – you don’t get it after your first year. There is no cap on the bonus miles you can earn.
- In-flight Wi-Fi credit: If you purchase Wi-Fi access on a flight with your it Miles card, you’ll get a statement credit to cancel out your purchase within 7 days (up to $30 per year). This benefit renews with every cardholder anniversary.
- Free FICO score: As with Discover’s other cards, you get free access to your TransUnion FICO score.
- No foreign transaction fees
How much your miles are worth
Here’s where it gets interesting. For most cards marketed as travel cards, you’re either restricted to redeeming for travel purchases, or you get a better value for you points when you redeem for travel compared to cash back.
For the it Miles card, here’s how it works, according to the card’s terms and conditions:
What this boils down to is that you can redeem for statement credits against travel expenses OR for cash back (deposited into an account) and get the same value of 1 cent per mile. Redeeming for statement credits is probably easier and faster. Yet, if you’re willing to link a bank account and wait for the electronic deposit, you don’t have sacrifice value if you want cash.
For reference, the travel expenses eligible for statement credits are: airline tickets, hotels, car rentals, cruises, tour operators, vacation packages (when purchased through airlines, travel agents and travel websites), local transit, ferries, rail tickets, taxis, limos and charter buses.
While some cards have redemption minimums, Discover is more flexible – you can redeem as little as 1 mile at a time.
How it compares
Which card is right for you is a complex decision, and no review will cover all the factors you should weigh. But here are a few things to consider:
Sign-up bonus or lack thereof: The card isn’t advertising any sign-up bonus in the traditional sense right now (as of March 2015). Instead, you get double your miles the first year. How much that will get you depends on how much you spend on the card.
So, on one hand, the it Miles card gives you complete control over how big a bonus you get – if you can concentrate all your spending on the card, you may well end up with a lot of bonus miles.
On the other hand, other cards in the same field might get you a bonus with a lower spending threshold. For example, a card might give you 20,000 bonus miles/points or $200 cash back if you spend $1,000 in the first three months. Cards with annual fees might give you even more. If you spread out your spending across several cards, that type bonus structure may be a better fit, since you can rack up tens of thousands of points for only $1,000 in spending. Plus, with the it Miles card, you have to wait a full year to receive your bonus, so it may not serve your needs you if you were hoping for pile of bonus miles to use on a trip a few months from now.
The Wi-Fi reimbursement: While $30 a year isn’t much, this is a rare perk among no-annual-fee cards. Assuming you’d buy in-flight Wi-Fi anyway, it saves you money. If you wouldn’t, then you’re getting a small luxury for free.
No bonus categories: That’s good or bad, depending on how you look at it. On one hand, you’re getting a steady, competitive rate of return for a no-annual-fee card — 1.5 percent — without having to keep track of categories. That places this card in between the 1.25 percent you get back with the no-fee VentureOne and the 2 percent you get back with the $59-a-year Venture. The BankAmericard Travel Rewards card is probably the most similar, earning 1.5 percent back on everything (plus a 10 percent bonus on points earned if you bank with BofA).
The no-fee Barclaycard Arrival, meanwhile, gets you 1 percent back on most spending and 2 percent back on travel expenses and restaurants. If you spend a lot on travel and dining, those categories can really help you: a $5,000 travel purchase, for example, would get you 10,000 points with the Arrival and only 7,500 with the it Miles card.
And let’s not forget the regular old Discover it card – that gives you 5 percent back on certain rotating categories for up to $1,500 in purchases each quarter. Discover has a reputation for lucrative bonus categories, from gas, to restaurants, to home improvement and more. To put that in perspective, $1,500 in bonus-category purchases would get you $75 with the regular it and $22.50 with the it Miles.
This card isn’t a bad fit if you’re looking for a low-maintenance workhorse of a card. For no annual fee, you’re getting a respectable 1.5 percent back with the flexibility of redeeming for travel or cash.
Just remember that the first-year bonus on this card is tied directly to how much you spend and requires you to wait an entire year. If you can funnel a lot of (if not all) you spending through this card for a whole year, its bonus structure may benefit you. If not, consider cards that reward you a surge of points after just a few months if you satisfy the minimum spending threshold.
If you do decide to go for the it Miles card, a good move might be to pair it with the regular Discover it card. That way, you can use the ‘it’ for bonus-category purchases and switch over to the it Miles for everything else.
However, remember that your existing Discover account must be open for 12 months before you can get a second card. So this strategy would work only for those who are willing to wait a year, or who have been Discover cardmembers for a year already. There are also some complexities with having two Discover cards, as your rewards pools remain separate. That’s a hassle for sure, but if you’re redeeming for cash back and statement credits, this may not matter, especially since Discover doesn’t have a redemption minimum.
Updated July 1, 2016