Maximizing Discover rewards: car rentals

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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.

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