People in the market for a credit card that offers travel rewards can be intimidated by complicated rewards programs with restrictions on which airlines you can fly, when you can go and how you redeem rewards. So-called general travel cards solve that problem by letting you redeem your rewards as a credit on your statement against any travel purchase. The catch? They tend to come with an annual fee.
Then there are the Discover it® Miles and the Bank of America® Travel Rewards credit card. These cards give you a simple, streamlined process for earning and redeeming rewards with no annual fee. They’ve got some key features in common, particularly their rewards rates, but also important differences. Let’s start with the basics.
|Discover it® Miles||Bank of America® Travel Rewards credit card|
|Sign-up bonus||We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.||20,000 online bonus points if you make at least $1,000 in purchases in the first 90 days of account opening - that can be a $200 statement credit toward travel purchases|
|APR||0% on Purchases for 14 months and 10.99% on Balance Transfers for 14 months, and then the ongoing APR of 13.49% - 24.49% Variable APR||0% on Purchases for 12 billing cycles, and then the ongoing APR of 16.49% - 24.49% Variable APR|
|Rewards rate||Unlimited 1.5 miles per dollar on all purchases||Unlimited 1.5 points per dollar on all purchases; Bank of America® customers can earn bonus rewards|
In addition, both cards charge no foreign transaction fees and offer cardholders free access to their FICO scores.
By the numbers, Discover gets the edge on interest rates, but note that neither card offers a 0% APR period on balance transfers — only on purchases. If you have debt you’d like to pay off at 0%, you’re better off with a card specifically designed for balance transfers.
Now, let’s look at some important distinctions between these two travel cards.
Discover it® Miles: Your bonus your way
The most attractive aspect of the Discover it® Miles is its first-year bonus. Discover describes it this way: We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles. This puts you fully in charge of your bonus: The more you use the card, the more you earn. If you put at least $13,334 on this card in the first year, you’ll get a bigger bonus than you would with the Bank of America® Travel Rewards credit card.
Once you’ve earned all these miles, you have two redemption options: redeem miles to pay for travel expenses on your statement, or redeem for a cash deposit into a bank account. One mile is worth 1 cent, regardless of how you redeem, so at 1.5 miles per $1 spent, your effective rewards rate in the first year is 3%. That’s even better than most popular travel cards with an annual fee.
And while you’ll be doing a lot of flying, you won’t have to skip in-flight Wi-Fi, because Discover it® Miles provides a $30 annual credit to keep you connected.
Discover topped the 2015 J.D. Power Credit Card Customer Satisfaction survey, and Discover it® Miles offers some customer-pleasing features. These include U.S.-based customer service, no late fee for your first missed payment, and Freeze It, which gives you the ability to “turn off” your card from your phone if it’s been lost, stolen or misplaced. If you find your card — say, at the bottom of the washing machine or at the restaurant where you had dinner last night — you can turn it on again.
There are also extras when you shop in the online portal, Discover Deals, which offers discounts at various retailers and bonus cash back on partners’ websites.
One warning: If you travel a lot overseas, your ability to use the Discover it® Miles could be limited, since Discover isn’t as widely accepted. For travel in the U.S., though, acceptance is unlikely to be a major problem.
Bank of America® Travel Rewards Credit Card: Loyalty pays
The standout feature of the Bank of America® Travel Rewards credit card is the loyalty rewards you can earn if you already bank or invest with Bank of America®, Merrill Edge® or Merrill Lynch®. Simply having a checking or savings account at Bank of America® entitles you to a 10% bonus, which makes your effective rewards rate 1.65%. If you’re enrolled in the Preferred Rewards program, you can get even bigger bonuses — but you’ll need to keep relatively high balances to earn them. Here’s how much you’ll need in combined Bank of America®, Merrill Edge® or Merrill Lynch® balances, and what you’d earn in travel rewards based on $1,000 a month in spending ($12,000 a year):
|Combined balance||Bonus||Effective rewards rate||Rewards on $12,000 in spending|
|$100,000 or more||75%||2.625%||$315|
New cardholders also earn a sign-up bonus: 20,000 online bonus points if you make at least $1,000 in purchases in the first 90 days of account opening - that can be a $200 statement credit toward travel purchases. It’s pretty good, but the offer on the Discover it® Miles may be better, depending on your spending. Use our calculator to estimate your own rewards based on how much you spend:
You can increase your rewards on the Bank of America® Travel Rewards credit card by booking travel through the Bank of America® Travel Center, where you’ll earn 3 points per $1 spent. This includes airlines, hotels, rental cars, cruises and most other travel-related costs. If you book a $1,200 cruise through the Travel Center, for instance, you’ll earn 3,600 points instead of the 1,800 you’d earn if you booked it elsewhere.
The redemption process is easy. Use points to pay for travel-related expenses you’ve charged to your card. One point is equal to 1 cent. If you choose to deposit your rewards as cash into one of your accounts, though, you’ll earn less: 1 point redeems for cash at 0.6 cents.
The Bank of America® Travel Rewards credit card is part of the Visa Signature network, which means you have all of that network’s travel benefits, such as car rental insurance, travel accident insurance and lost luggage reimbursement. The Visa Signature program also offers perks related to shopping, concerts and performances, and food and wine events. And, of course, you get all of the network’s purchase protections.
And the winner is…
Unless you’re a Bank of America® customer with significant accounts or plan a lot of overseas travel, the Discover it® Miles will likely be the better travel card for you. The rewards rates are the same on both cards, but the Discover it® Miles gives you more flexibility if you don’t use your miles for travel. And the sky’s the limit on the sign-up bonus.