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This article is from the Credit cards and Consumer Credit FAQ, by adams@spss.com (Steve Adams) with numerous contributions by others.

208. Why is a discount better than a rebate?

Rebates are a percentage refund on your purchases, either by check
or by credit to your account. Discounts actually reduce the price
on the bill before you pay it. Discover offers rebates on all
purchases. The Ameritech Complete MasterCard gives 10% rebates on
credit-card calls at the end of the year, where the AT&T Universal
card gives 10% discounts on credit-card calls. On the principle
that it's always better to keep money in your account than to pay it
out and get some of it back later, discounts are better than rebates
if the numbers are otherwise equal.

 

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• next: 209. What else should I watch out for in credit cards with rebates?

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