Retailers Offer Added Perks for Tax Rebates

The federal government sent out the first round of economic stimulus rebates on Monday — four days earlier than initially expected.

An estimated 1.6 million taxpayers received their direct-deposited rebates on Monday and Tuesday, as part of a push to get another $50 billion into the U.S. economy by the end of May. Another 800,000 are being sent out today, as well as more than five million deposits on Friday. Folks who opted for a paper check have a little longer to wait. The first mailing is May 9.

Under the Recovery Rebates and Economic Stimulus for the American People Act of 2008, individual taxpayers will receive a tax rebate check of $300 to $600; married couples, up to $1,200, based on their adjusted gross income for tax year 2007. Families with children may receive an additional $300 per child.

The act's total rebates, to the tune of more than $150 billion for 130 million households, will be fully distributed by July.

Surveys have found that most consumers plan to be conservative with their checks, despite government hopes that the cash will be funneled back into the economy via shopping sprees. One from tax information provider CCH found that 47% of respondents planned to use it to pay down debt, 32% would save it and 21% wanted to spend it.

Needless to say, using the money in a way that betters your financial situation is a smart move. This includes paying down credit-card debt, adding to your emergency fund or socking away a little extra for retirement.

If, on the other hand, you feel compelled to do your civic duty by stimulating the economy (translation: that rebate is burning a hole in your pocket), be cautious. "There are a lot of 'bring your check here' sales, but you have to be really critical," says Edgar Dworsky, founder of consumer advocacy site ConsumerWorld.org. Many require you to fork over your entire rebate, although you will get some sort of reward in return. Both Sears and Kroger, for example, will add a 10% bonus for rebate check spending — provided you use your entire rebate for a store gift card. Steer clear of these unless you had planned to spend your full rebate at the store anyway.

If just part of your rebate check is going to be spent, here's how to get the most bang for your rebate buck.

Struggling Retailers

"Retailers are quaking," says Mary Hunt, founder of Debt-Proof Living, a consumer advocate. "There are absolutely some fantastic deals out there." Higher prices for staples like gas and groceries hurt overall consumer spending in March, but particularly hard-hit were home furnishings (down 10.2% from last year), garden equipment (down 9.6%), clothing and accessories (down 2%) and consumer electronics and appliances (down 1%), reports the National Retail Federation. You may spot more sales in these categories, or find retailers more willing to haggle, says Hunt.

Seasonal Shopping

Savvy shoppers know to peruse the spring sales as retailers clear their shelves of the last winter gear and bring in summer stock in full force. (For more on what's best to buy in spring, see our column The Best Deals for Spring Shoppers.)

Home Upgrades

Splurging on a new energy-efficient fridge will likely cut your energy bills and improve your home's value, says self-titled "super shopper" Robyn Freedman Spizman. "Think of this [windfall] as the opportunity to go for the investments that will pay off dividends later," she says.