Rebate Cards

Why do we mention rebate cards in a discussion of mileage-generating cards?

Because miles are themselves a form of rebate, albeit a non-cash rebate. And it would be foolish to opt for a rebate in the form of a free ticket if the value of an available cash rebate were substantially greater. Which begs the question: how much value do rebate cards deliver, compared with their mileage-card counterparts?

There are too many rebate cards available for us to offer a comprehensive comparison, so we'll use the Discover card as an example.

The no-annual-fee Discover card gives users a yearly cash rebate, ranging from .25% to 1% depending on the amount charged. An airline card, on the other hand, awards 1 mile per dollar spent. Assuming a mile to be worth between 1 and 2 cents, or 1% to 2%, the value of the mileage rebate far exceeds the value of Discover's cash rebate.

But... and this is a big "but"... an airline ticket is an airline ticket, and cash is cash. And if you don't want or need to travel, a cash rebate could have more real-life value than a ticket, regardless of their respective dollar values.