Discover Miles Card — Up To 3% Cash Back On All Purchases

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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:

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 Business Platinum® Card from American Express OPEN, 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.

Bottom line

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.

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Comments

  1. So instead of a sign-up bonus you get double your first year spending. This will slow down any churning and also delays any bonus pay-out. It’s a neat offer and kind of smart by discover. It’s odd they don’t list the Barclay Arrival card as one of the comparisons since that seems like a big challenger.

  2. People will get this, spend a lot the first year and then stop using the card altogether (and switch back to their Arrival, Fidelity or Double Cash card which gets at least 2%). Not sure if that is a great strategy by Discover.
    The other thing to mention is that this probably gives you access to Discover’s shopping portal which often has good deals.

  3. Another useful thing for Discover is that they have deals with JCB and Unionpay, the payment networks of Japan and China.

    In many places in both countries (i.e. outside of hotels and airports), you can only use domestic cards that process through the local payment networks. Having a USD card with no fees and good cashback to use at these places is a huge advantage if you spend much time in either country.

  4. Just got this with intent to use it outside of the U.S. and to take advantage of the 0% foreign transaction fee but it doesn’t have the chip technology on the card. So we’ll see if I can use this as often as I hoped for in Europe….

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