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Review: Discover it Miles Card

Author: Ethan Harris

Are you looking for a cash-back credit card with generous rewards and no annual fee? If so, we think you'll like the new Discover it Miles card. Read on to learn more about this card, its benefits and the fine print.

The Bank

Discover Financial Services (DFS) is a publicly traded banking and payment services company that is one of the biggest credit card issuers in the United States. Discover offers just a few credit cards, including the Discover it Cash Back, Discover it Students, Discover it Miles and Discover Business card.

If you've ever earned cash back from a credit card, you have Discover to thank. Decades ago, it was the first company to offer a cash rewards credit card. It also changed the credit card industry by issuing cards with no annual fee and offering 24/7 customer service. (For related reading, see What are some examples of common credit card reward program benefits? and Find The Top Cash Back Credit Cards.)

Like other credit cards, Discover won't hold you liable for fraudulent transactions (it has a "$0 Fraud Liability Guarantee"), meaning you pay nothing if your card is lost or stolen and a thief uses it to make purchases. Also like other credit cards, Discover cards offer extra benefits such as purchase protection, extended product warranties, price protection and return guarantees.

The Card

The new Discover it Miles card has no annual fee and gives cardholders the equivalent of 3% cash back on all purchases if they redeem their miles for cash (rate is one mile equals one cent) for the first year

This promotion might offer the highest across-the-board cash-back rate available right now. Other top rewards credit cards, such as Chase Freedom and the regular Discover it Cash Back card, offer 5% back in spending categories that change each quarter; they also make you register each quarter to earn the higher cash back rate.

Still other cards offer the same high cash-back percentage year round, but only in one or two categories. An example is American Express's Blue Cash Everyday card, which gives you 3% back on groceries, 2% back at gas stations and select department stores, and 1% back on everything else. The Discover it Miles card doesn't have these limitations. (Learn more about earning cash back in Maximize Your Rewards With A Few Credit Cards.)

Here's how to earn 3% cash back from the new Discover it Miles card: You'll get 1.5 miles per $1 spent on all your purchases. Then, after 12 months, Discover will double all the miles you've earned at the end of your first year. That means you'll need to keep your account open the whole year to get the bonus. Fortunately, this card has no annual fee.

You can earn even more miles when you do your online shopping through the Discover Deals portal, and Discover says it will double those miles at the end of the year, too. After the first year, you'll continue to earn 1.5 miles per $1 spent.

While the card advertises its rewards as miles, they're as good as cash. You can redeem your miles for a statement credit for travel purchases made on your Discover it Miles card within the last 180 days. Travel purchases consist of commercial airline tickets; hotel rooms; car rentals; cruises; tour operators; vacation packages purchased through airlines, travel agents or online travel sites; local and suburban commuter transportation, including ferries; passenger railways; taxicabs and limousines; and charter or tour bus lines.

You can also redeem your miles as a cash deposit to your bank account. There is no minimum redemption amount, and one mile is worth one cent. Miles don't expire, and if you close your account, Discover will automatically credit you for the value of your unredeemed miles. Unlike other Discover cards, however, you can't redeem your miles for gift cards.

The Discover it Miles card also has these ongoing benefits:

– $30 credit for in-flight WiFi every year

– No penalty APR

– No late fee the first time your payment is late

– Free FICO credit score with your monthly statement

– No foreign transaction fees

Many travelers report that Discover is not widely accepted in Europe, but it is the card of choice in China (read Best Credit Cards for Travel In China to learn more.) Technically, the card is accepted in dozens of countries, but your ability to use a Discover card in a particular country will vary by merchant.

The Fine Print

The Discover it Miles card has a 0% introductory APR for 12 months from the date of account opening. After that, the APR will be 10.99% to 22.99% variable, based on your creditworthiness and the prime rate. This isn't the best card for balance transfers; the introductory balance transfer APR is 10.99% for 12 months, and after that, the rate is the same as the purchase APR, plus there's a 3% balance transfer fee for each transfer. You can find other cards with a 0% introductory APR on balance transfers. (For related reading, see Top Credit Cards For Balance Transfers and Alternatives To Balance Transfers.)

We also don't recommend getting a cash advance with this card (or any credit card); the APR is 24.99% variable and the transaction fee is $10 or 5% of the amount advanced, whichever is greater. Cash advances and balance transfers don't earn miles, either.

The Bottom Line

For consumers who qualify, the Discover it Miles card has one of the best cash-back promotional offers around. While it doesn't offer a large up-front sign-up bonus, this new card is a strong competitor to the Barclaycard Arrival Plus World Elite Master Card.

If you're someone who pays your credit card bills in full and on time every month, and if you can afford the temporary hit to your credit score that comes with opening a new credit card account, the Discover it Miles card could make a great addition to your wallet. (To learn more, read Discover Credit Cards: Advantages & Disadvantages and The 5 Biggest Factors That Affect Your Credit.) After the first year, the miles reward will be less rich, but you will still benefit from no annual fee and the ability to use your miles for either cash back or travel purchases.

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