Financial Experts Urge Caution on Rebates

April 14, 2008

Financial experts this year are urging consumers to exercise caution when it comes to spending their federal rebate checks.

The checks are the payoff from an economic stimulus package recently signed by President George W. Bush. The White House and Congress masterminded the deal in an effort to jump-start the economy.

Public officials are hoping that taxpayers will help the U.S. spend its way out of recession. However, some financial experts say that it may not be in consumers’ best interests to spend their rebate checks.

Instead, it may be wise for taxpayers to use their rebates to pay on their debts or to refinance. The rebates could help consumers get back into the habit of saving rather than splurging on big-ticket items such as flat screen televisions and fancy cell phones.

A recent Zogby poll indicated that 40% of Americans intend to use their rebates to pay on their debts. The poll was commissioned by the credit-rating service known as TransUnion TrueCredit.

Less than 20% of those consumers surveyed said they intend to spend the rebate on ’something they consider necessary.’ Another 20% stated that they intend to save the money they receive from the rebates.

The amount of rebate consumers receive will depend on a number of factors, including income, marital status, and number of children. For those who are married, have 2 children, and have household incomes of less than $150,000, the amount of the rebate will be about $1,800. Such a rebate can go a long way toward paying off debts.

It can be particularly important to pay off credit card debt. This kind of debt often carries high interest rates and cannot be deducted from one’s income taxes. Therefore, using rebate money to pay off credit card debts can be a financially savvy strategy.

Recent financial news: