As of November 6th, all Discover cards have no foreign transaction fees! This is excellent news if you already have a Discover credit card, of course, but should you consider getting one because of the change? The answer depends on your travel habits. As you might expect, Discover’s new pricing structure has the biggest effect on their two airline miles credit cards: the Miles and the Escape. While we do have a few words of caution, we’re super excited to see these cards become a more competitive choice for international travelers. The rewards are decent and easy to redeem. And if you’re looking for the most bang for your buck in terms of reward redemption, Discover provides plenty of good options.
Discover Escape beats Discover Miles
The Discover Miles card and the Discover Escape card are similar in many respects. Both offer a 0% introductory purchase and transfer APR for the first six months, and if you transfer your balance before February 2012, your B/T fee will be only 3%. (Mind you, that’s hardly noteworthy: Citi has 3% transfer fees all the time, and any number of credit unions waive it altogether.)
The primary differences between the two are the annual fee and rewards rate. The Miles card offers a base rewards rate of one mile per dollar, the industry standard, and a maximum of two miles per dollar for qualifying purchases. The Discover Escape card offers double miles (the equivalent of 2% back) for every dollar you spend, putting it on par with cards like the Capital One Venture Rewards card.
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The Escape has a $60 annual fee, but it’s worth it for the better rewards rate. The Discover Miles card only offers double miles on the first $3,000 you spend on restaurant and travel purchases. After that, you can only earn bonus miles through Discover’s online shopping mall. To Discover’s credit, that includes over 175 top retailers, but the Escape card still has the edge, even with the annual fee. The Discover Escape also offers the best signup bonus of the two cards. It gives you 25,000 miles, worth $250, but they’re paid out at a rate of 1,000 per month, forcing you to keep your card active for 2+ years. The Discover Miles only offers a 12,000-mile signup bonus, worth $120, with the same 1,000 miles per month restriction.
What about international purchases?
Discover cards have always gotten a bad rap for low their acceptance rate at home and abroad. Although you still can’t use them as many places as a Visa or MasterCard, Discover has made a tremendous effort to expand their network in recent years. In fact, you’ll find it very easy to use a Discover card in a few parts of the world. Thanks to Discover’s joint venture with China UnionPay in 2005, Discover is more widely accepted in China than Visa or MasterCard. Similar agreements with JCB, Redecard and BC Card have also made Discover cards widely accepted in Japan, Brazil and South Korea, respectively. A Discover card is definitely worth considering if you visit any of these countries frequently, especially now that there’s no foreign transaction fee.
Love those flexible miles
One of the best things about Discover miles has to be their flexibility. Most credit card miles can only be used for airline tickets or hotel stays. Additionally, airline miles are typically good for airfare, but not additional charges or taxes. With a Discover card, you’re allowed to combine airline miles from multiple cards and use your miles for any kind of travel purchase (or expense) you want, booked any way you want. This definitely gives it an edge for travelers who need more spending flexibility.
Verdict: If you’re looking for a Discover card for travel, we definitely recommend the Escape. Be sure to check Discover’s list of countries to see if you can use it in the countries you visit most. The Discover Miles credit card is intended for people who don’t travel as frequently, but still want to earn airline miles with no annual fee. We’re glad this option exists. However, depending on your spending habits, you might be better off with a regular rewards card instead of an airline card. Take the time to consider your options before signing up.
Check out a no international fee credit cards, and stop paying unnecessary fees!