Retailers Woo Consumers With Rebate-Related Deals

Today is payday for some taxpayers as the IRS begins distributing the first of more than 800,000 electronic payments to those filers who qualified for the government's economic stimulus package, or a rebate. Click here to see the IRS FAQs on the stimulus package.

In total, the government expects 130 million low and middle income taxpayers will receive a rebate check, and close to 8 million will receive their money this week. Retailers are already finding ways to woo the money out of taxpayers' bank accounts and into their own pockets.

Some grocery stores have set up programs where consumers will be able to trade in their rebate checks for store gifts cards. But before you shell out your money, "Good Morning America" financial contributor Wendy Bounds helps you separate the deals from the duds.

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Companies' Incentives

Many retailers are offering a 10 percent bump if you trade your stimulus check for gift cards to be spent only in their stores. For example, if you receive a $300 rebate check, you can get $330 in gift cards from the retailers. This way, you've committed to spend your entire check in their stores, and linking the rebates to gift cards is a smart tactic because shoppers usually spend more than the value of the cards when they use one.

How They Work

Most retailers want you to bring in your rebate check and they'll exchange it for gift cards on the spot.

This first wave of rebate checks is being direct deposited and you'll receive your rebate the same way you requested when you filed your taxes. So, you won't have a physical check to bring in. Many retailers want you to bring in a bank statement to prove you received the rebate check.

However, some retailers are so eager to get you into their stores, they will give you these deals even if you don't have a check or a statement, or even if you're not getting a rebate. They just want your business. Some stores are linking deals to the stimulus package in their advertising, but don't really have any tie to the rebate checks. For example, Restoration Hardware has an "economic stimulus voucher" for $100 off any purchase of $750 or more or the option of getting a no-interest/no-payment credit card with a $750 purchase.

Best Way to Spend Your Rebate

With so many people struggling to afford the basics, these rebate deals are a good opportunity to get more for your buying dollar in supermarkets like Kroger's, which is offering a 10 percent bump if you buy their gift cards. If you are thinking about buying a big ticket item, this is the time to do it. For example, Sears is offering an additional return of 10 percent if you trade your check for a gift card.

Keep in mind that each retailer's deal has quirks. So, be sure to read the fine print. Another thing to remember is that, with all this money flooding the market, the buyer finally has leverage. So, if a store that isn't offering a deal — or even a local store — has something you want, try to bargain with it. Retailers are hungry for your dollars; you may be able to cut a deal if you're willing to spend your entire check in their store.

That said, if you don't need your rebate to make ends meet — lucky you — you're probably better served by putting your check in the bank or making an extra mortgage payment. Or, if you haven't had a night out with your family in ages, take them out and have a good time. You can't put off the good stuff forever.

Things to Watch Out For

Don't commit your check to a store that offers nothing in return. For example, Home Depot is linking its advertising to the rebate checks and offering discounts through July on eco-friendly products. That's great, but it doesn't add to the value of your check. So, don't blow it in a store that gives you more money for your check, but has nothing you want. That's just a waste of all of your money.

Make sure there are no fees or expiration dates on your cards. Committing to spend all your money in a supermarket is a great way to save on groceries. But if the card expires before you can spend your money, what good is it?

Also, don't be fooled by e-mails or phone calls that offer ways to increase or speed up your check. These scammers will try to get personal information from you to steal your identity. The IRS will not contact you by phone or e-mail.

How The Stimulus Check Affects 2009 Taxes

There is a lot of confusion about this. No, the stimulus payment will not reduce your refund or increase the amount you owe when you file your 2008 return.