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There’s a lot of buzz this week about the new Discover it Miles Card, which is a brand new product from Discover.
The card offers unlimited 1.5x Miles for every net dollar you spend on purchases, with a few options for redemption.
- You can redeem for cash as an electronic deposit to your bank account or for a credit for Travel Purchases on your statement made within in last 180 days.
- Travel Purchases include airline tickets, hotel rooms, car rentals, travel agents, online travel sites and commuter transportation.
Beyond that, you earn double miles for the first year. After the first 12 consecutive billing periods that your new account is open, Discover will double all the miles you’ve earned and apply them to your account in the next billing cycle
So you’re effectively getting 3% back on all purchases for the first year, which is tough to beat on everyday spending.
No bonus categories vs. high return on everyday spend
In general, if you’re leveraging bonus categories on travel rewards cards, you can typically do better than 3% back. For example:
- The Chase Sapphire Preferred® Card offers double points on dining and travel
- As of April 19, 2015, the Citi ThankYou® Premier Card offers triple points on travel and gas and double points on dining and entertainment
- The The Amex EveryDay® Credit Card and Amex EveryDay® Preferred Credit Card from American Express offer bonus points at supermarkets and at gas stations, plus a 20-50% points bonus when you make a minimum number of purchases per month
For specific categories, those are all bonuses I value at more than 3%, and after the first year I value “base” spend on those cards at over 1.5 cents each. That being said, aside from the The Amex EveryDay® Credit Card, these cards also all have annual fees.
Do keep in mind they all offer substantial sign-up bonuses upon reaching a minimum amount of spend, while the sign-up bonus on the Discover it Miles Card comes in the form of increased rewards for the first year.
No annual fee
The heading says it all. To get 3% back on what would otherwise be non-bonused spend is a pretty big selling point, in my opinion.
In-flight WiFi credit
Up to $30 of Wifi purchases on the Discover it Miles card will be reimbursed each year, which is a nice perk. I pay for a monthly Gogo subscription, and otherwise have passes through The Enhanced Business Platinum® Card from American Express, but this is a great perk for casual travelers.
Cash back versus miles/points
While I don’t talk about them as often on the blog, I am not at all opposed to cash back cards in general.
I think that they’re a valuable part of a card portfolio, and are a great way to offset some of the expenses of award travel, if nothing else.
I prefer to focus the bulk of my energy on earning points in programs that offer more aspirational opportunities, but for some situations (like my brother’s), a cash back card might make the most sense.
This card has the potential to be extremely lucrative for someone that:
- Spends a ton in non-bonused categories the first year
- Someone that just wants a simple, no annual fee cash back card
Otherwise I do think there are ultimately more lucrative cards out there, though it’s always nice to have new options.