Maximizing Discover rewards: car rentals

Most Discover cards offer cash back rewards.  For example, the Discover It card offers 1% cash back for all regular purchases and 5% cash back on purchases within categories that change each quarter, up to $1500 in spend.  You can maximize your earnings by spending within the 5% categories, by making use of the lucrative ShopDiscover cash back portal, and by signing up for special offers. 

In addition to maximizing earnings, it is possible to maximize the value of your rewards.  With the Discover card, you can simply get cash back directly or you can redeem rewards for partner gift cards.  On the face of it, some of these appear to be amazingly good deals.  For example, they advertise $40 car rental gift cards for $20; Hyatt $100 gift cards for $40; $120 cruise certificates for $60; Universal Orlando Resorts $240 certificate for $120; $50 restaurant certificates for $45; $50 retail store certificates for $40 or $45; etc.

Let’s take a deeper look today at car rental gift cards.  I’ll follow up soon by delving into other redemption options.

Discover offers three “half price” car rental gift certificates for Alamo, Enterprise, and National:

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To get one of these certificates you must redeem $20 worth of Discover cash back rewards.  This sounds great until you read the conditions:

  • One certificate per rental
  • Not valid with any other offer, discount or promotional rate

Since you can’t combine multiple certificates and you can’t apply other discounts, this amounts to a flat $20 discount off of rentals of $40 or more.  This could be a good deal for cheap rentals (e.g. total $40 to $80 or so), but for more expensive rentals you will probably get a better deal by looking for a discount or promotional rate.

If you’re interested, here are the full terms & conditions (from the Alamo certificate):

Valid coupon ID required for all rentals. Certificate may only be used once and is void after redemption. Dollar-denominated certificates valid for the rental of any size vehicle. Offer subject to standard rental conditions. 24-hour advance reservation required. Subject to availability, and valid at participating locations in the United States. Certificate is not valid on open or previous rentals. Face value of certificate will be applied to total base rate for the entire rental period but excludes taxes (including GST), other governmentally-authorized or imposed surcharges, license recoupment/air tax recovery and concession recoupment fees, airport and airport facility fees, fuel, additional driver fee, one-way rental charge or optional items, which shall be the responsibility of renter. Check your auto policy and/or credit card agreement for rental vehicle coverage. Certificate is not valid with any other offer, certificate, discount or promotional rate from Alamo. Any unused portion of the certificate will be forfeited, and no residual credit or refunds will be issued if certificate is not fully used. Certificate is not exchangeable, refundable, transferable or redeemable for cash. Certificate void if damaged, defaced, reproduced, bought, bartered or sold for cash. Void where prohibited. Gift code does not expire and has no dormancy fee. ©2012 Alamo Rent A Car. All rights reserved.

Analysis

Let’s assume, for the sake of argument, that you can always find a 20% off coupon or discount code.  In that case, we need to compare the discount given by the Discover certificates to the 20% off option.  Let’s look at several potential rental rates and we’ll calculate the cost to go with the Discover certificate vs. the cost when using a 20% off code:

$50 Rental

  • Discover certificate: $20 for certificate + $10 = $30
  • 20% off code: $50 – 20% = $40

In this scenario, the Discover certificate saves you a total of $10.

$80 Rental

  • Discover certificate: $20 for certificate + $40 = $60
  • 20% off code: $80 – 20% = $64

In this scenario, the Discover certificate saves you a total of $4.

$100 Rental

  • Discover certificate: $20 for certificate + $60 = $80
  • 20% off code: $100 – 20% = $80

In this scenario, both options are equal

$150 Rental

  • Discover certificate: $20 for certificate + $110 extra = $130
  • 20% off code: $150 – 20% = $120

In this scenario, you would save $10 by going with the 20% off coupon code instead of the Discover certificate.

Bottom Line

Rental car certificates can save you a little bit of money under certain circumstances.  Specifically, you would need to have a total rental cost (before taxes and fees) of less than $100.  I don’t really think it would be worth bothering with the certificate, though, unless your rental cost was closer to $40 or $50.

I’m interested in hearing from readers.  Have you used any Discover partner certificates?  Which did you use?  Did it work out as you expected?  Did you get more value from your Discover rewards than you would have had you simply received cash back?

Hat tip to al613 for reminding me about these car rental certificates.

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

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Comments

  1. I’ve earned most of my Discover points through the Mall with Groupon – had been 15% for many months but was recently reduced to 10%. I then redeem for Staples gift certificates – $20 worth of points gets a $25 Staples certificate which I use for FAR items and for items I would buy anyhow. Has worked well to date.

  2. In June I went on a cruise from Singapore. I bought 2 cabins and I used 2 $100 partner GCs. The partner GCs gave me a combined total of $400 off. However, you have to use Discover Card’s travel agent. I was not happy with their travel agent. I had a question about if I needed a Visa to get off the ship in Vietnam. Since I was paying the travel agent a commission, I wanted her to find the answer. The travel agent emailed me a link to US.gov site for me to look it up myself. Didn’t like that.

    Also, travel agents usually throw in $100 room credit anyway when you purchase with them so I’m not sure I saved a lot.

    Next cruise I plan on putting the reservation on Chase United card and get 35K miles for each balcony cabin. No more Discover for me for cruise discounts.

  3. Can one get the $100 Hyatt GC for $40 and resell it for >80% of face value? It says “paper certificate,” and I’m unclear on what that means.

  4. I’m not a fan of the Hyatt redemption option. It says you can flip $40 of cashback bonus into a $100 certificate, but it’s pretty restrictive. Fine print says it has to be used on a two-night stay, some of their hotels won’t accept it, and there are blackout dates that I could only get by checking directly with the hotel.

    I did the $40-to-$100 Hyatt certificate years ago, and it confused the check-in clerk. Manager had to get involved, and I even had to follow-up via email post-trip to ensure that it got credited.

  5. the car rental certificate credit can only be used for rental rates, and not taxes and fees, etc. so even for one-two day rentals, it is often cheaper to use priceline or ultimate rewards.

  6. You can combine discover certificate and cash back portal. I just did it for Enterprise. Got 5% back through Discover cash back.

  7. Absolutely not. In my opinion, in a word, they’re pretty much useless. I’d rather just redeem for gift cards and get a little bit more value, or straight up cash back. I had a rather unpleasant experience when trying to redeem for an FTD certificate. FTD certificate terms say that in order to redeem, the product has to be redeemed through http://www.ftd.com/discovergc. So I went there and made sure the product I wanted was available and it was. Then I redeemed for the e-certificate. 2 minutes later when I went to redeem, the product didn’t even show up on the list, and of course, no refunds on the certificate. Had to end up buying another product that cost more money. Very disappointed. And the Hyatt certificates are pretty much useless too.

  8. I’ve used those Discover certificates with Enterprise quite a few times. First, one has to make a reservation with the Discover’s agent over the phone. Their availability and rates may be different (usually better) than what you get directly from Enterprise. The main issue with this route is that the rental agents don’t know how to handle those certificates. Returning the car routinely takes 2 hrs., and is a nightmare. On the plus side, the agents often let the cert’s cover taxes and other charges (excluded by the rules). Once my cc got charged the full amount of rental anyways, and I spend weeks trying to get Enterprise to fix that. I ended up having to reverse the charge with the cc.

  9. I’ve always wondered…what happens if you cancel a reservation where you used one of these rental certificates? Do you get back your certificate? If not, this effectively becomes a priceline/hotwire booking, but with more visibility.

  10. magnus: Certificates are good for 6 months from the date of issue. They become used up when you pay for the rental, not when you make a reservation. So nothing happens to the certificate when you change or cancel a reservation.

  11. discover does not earn 1% everywhere. it is 0.25% everywhere for the first $3000 spending, and then 1% everywhere another 3000 and then perhaps 2%.

  12. I have a good deal with Dollar car. But I don’t think Discover has certificates for that.

    How about if I price match Dollar car price with Alamos and then apply the certificate at the counter? Is it asking for too much?

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