Important Note: This card has been discontinued and replaced by the newer Discover it Card.
Those who seek credit card rewards are immediately tempted by airline-affiliated travel rewards cards that offer frequent flyer miles. However, many of us have become disillusioned by these offers when we realize how difficult it can be to find available airline awards at the lower mileage levels.
In response to this problem, credit card issuers have begun to create their own travel rewards systems where cardholders earn points that act as statement credits toward any travel related expense. In order to market these cards against airline-affiliated products, these banks have gone so far as to call their loyalty points “miles,” even when there is no travel involved. Discover offers its Miles card to consumers who want to earn flexible reward points that can be redeemed anytime and anywhere.
- Earn Miles Through Spending. Customers will receive one mile in Discover’s program for each dollar spent on most purchases, and double miles on their first $3,000 in travel and restaurant purchases each year.
- Receive 12,000 Bonus Miles. For the first 12 months after opening their account, new cardholders will earn 1,000 bonus miles each month they make a purchase – up to 12,000 miles. Ultimately, this is worth $120 toward any travel purchase.
- Redeem Miles Through Any Travel Provider. When the time comes to redeem your miles, you may do so by using your card to make purchases with any airline, hotel, rental car company, or travel agent. Then you simply request a statement credit for one cent per miles towards those charges.
- Other Redemption Options. Miles can also be exchanged for cash, gift cards, charitable donations, or merchandise at a rate of two miles per cent in value – half the value of miles redeemed for travel.
- Introductory Financing Offers. New cardholders will be eligible to receive a 0% APR introductory financing offer on balance transfers for 6 months. Balance transfers will have a 3% balance transfer fee imposed.
- Standard Interest Rate. Cardholders who carry a balance will incur interest at a variable rate equal to the Prime Rate plus 7.74% to 12.74%, depending on their credit worthiness.
- Annual Fee. There is no annual fee for this card.
- Foreign Transaction Fees. In 2011, Discover announced they were dropping all foreign transaction fees on all of their cards.
- Flexible Miles. Although the term “miles” is merely for marketing, the point is that Discover rewards can be used for any type of travel purchase. Unlike tickets booked with airline miles, award trips using these points are always eligible to earn miles and receive upgrades.
- Introductory Financing. 0% APR for 6 months on balance transfers is not the most competitive offer, but it can be useful to cardholders who are close to paying off a balance.
- Double Miles Offers. Earning double miles on travel and restaurant expenses is a quick way to earn travel credits.
- Low Fees. I like that there is no annual fee for this card, and I highly commend Discover for eliminating their foreign transaction fees.
- Strong Customer Service. Discover may be the smallest of the major credit card processing networks, but I find their customers to be intensely loyal to their products. This is in no small part due to their attentive customer service.
- Limit on Bonus Miles. It is good that Discover is offering double miles for travel and restaurant charges, but the $3,000 annual limit will quickly be reached by business travelers, or even by those who eat out regularly.
- Low Return Rate on Rewards. Earning credit card rewards is all about receiving the most value in return for each dollar spent, and one cent per dollar spent is the minimum one should expect from any rewards card. Unfortunately, that is the maximum this card delivers on most purchases when miles are redeemed for travel expenses.
- Poor Value for Non-Travel Rewards. If it wasn’t bad enough that most purchases only earned one cent in value towards travel credits, all other redemption options, such as cash back or gift cards, only return one-half a cent in value per mile redeemed. At that rate, these awards are not even worthy of consideration.
- Smaller Network. The Discover card is less likely to be accepted than cards that are part of other payment networks, such as Visa and MasterCard.
Discover has a good reputation that was only enhanced by their decision to drop all of their foreign transaction fees. The ideal user for this card is someone who is already a big fan of Discover’s other products and is ready to graduate to another Discover card that earns travel rewards.
Nevertheless, the value equation for this rewards card simply does not compete with similar products, such as Capital One’s Venture Rewards Card, which offers double miles on all purchases. Good customer service will only take you so far in such a competitive field, and applicants will be wise to stack up other offers against this one.
Are you a fan of Discover? What are your thoughts on the Discover Miles Card for travel rewards?