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Earlier this year, Citi introduced a unique benefit to its American Airlines credit cards. (Yes, cards plural; serious mileage earners get two at a time. See my Best Current Credit Card Offers.) Cardholders would get a 10% rebate on the miles used on AA awards up to a maximum of 10k AA miles rebated per calendar year.

In this post, I’ll explain how exactly the 10% rebate works and how to value it.

Unfortunately for me, the benefit was added after I used 62,500 AA miles to book Melbourne, Australia to LAX on a Qantas A380 in business class with a free oneway in AA first class to Tampa. That means that for 2012, I will not be able to max out this benefit by redeeming 100k+ miles on AA.

My only other redemption for 2012 was made August 8, when I redeemed 62,500 miles for a trip to Buenos Aires in First Class next February. LAX-DFW-MIA are early morning flights to get me in place to enjoy a nine-hour daytime first class experience down to EZE on this bird:

Meet Me in 3J

The 10% rebate process is automatic. There are no forms to fill out, no one to contact, and nothing to do. Just sit back and wait for the points to roll into your AA account.

For me, the process took exactly six weeks. On September 19, 6,250 miles posted to my AA account. The listed date of the miles being earned is the date I made the reservation–though they actually posted six weeks later.

Thepointsguy reported his miles posting “a few days [after]” he booked his award, so you certainly might get your miles faster than I did. The terms and conditions say you’ll get them in six to eight weeks.

How to value this perk

I value AA miles at 1.77 cents each. That means my rebate of 6,250 miles was like a $111 rebate–almost as valuable as the annoying visa I’ll have to get upon landing at EZE.

And if I had been able to max out the 2012 benefit by getting a 10k rebate, I would be getting a rebate worth $177, so this is a very valuable perk.

The rebate is so valuable that it could potentially tip an SPG-transfer decision. Imagine you have a ton of SPG points and a Citi AA card, but you don’t have any AA or US Airways miles. You want to take a roundtrip first class trip to Argentina.

Ordinarily it would cost 125k AA or US miles to fly from the US to Argentina in first class. That would mean you would need to transfer 100k SPG points at the rate of 20k SPG to 25k miles rate. In the absence of this Citi AA card benefit, you would just choose the program that had the availability you wanted given your preferred dates and airline preference.

But because of the 10% rebate, your options are different. If this would be your only AA redemption for the year, you would be rebated a full 10k AA miles if you went the AA route. Now it’s either 125k US miles or 115k AA miles, a noticeable difference.

Other Considerations

If I had multiple trips redeemed in a calendar year totaling 250k AA miles, I would still only earn the maximum 10k rebate. In that case, I would average out the 10k rebate across all 250k miles I spent and see that I got a 4% rebate (10/250). For each trip in this instance, I would consider the rebate 4% off the miles price.

Terms and Conditions

You do not need to use your Citi AA card to pay for the taxes and fees on your award to get the rebate. That is not in the T & C, and I did not use my Citi AA card for my award that earned a 10% rebate.

Many of us have two or more Citi AA cards. Despite that, I haven’t seen reports of anyone getting more than one rebate per award or more than 10k AA miles total per year.

Full T & C:

For benefit to apply, your Citi® / AAdvantage® account must be open and active at the time of redemption. The American Airlines AAdvantage® bonus miles you earn through this benefit will be based on 10% of the total AAdvantage® miles you redeem each month during the calendar year. The maximum number of AAdvantage® bonus miles you can earn annually from this benefit is 10,000 AAdvantage® bonus miles per calendar year, regardless of how many AAdvantage® miles you redeem in that calendar year. This benefit only applies to AAdvantage® miles redeemed from the primary cardmember’s AAdvantage® account. Discover all the ways to redeem AAdvantage® miles at www.aa.com/redeem. Please allow 6-8 weeks after your redemption for the American Airlines AAdvantage® bonus miles to post to the primary cardmember’s AAdvantage® account.

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