What is a rebate?

A rebate is probably best understood as a post-purchase refund or kickback. Structurally, it involves money being returned after the purchase, which makes it different from a direct discount.

In general, rebates fall into two main categories:

  • One is a mail-in rebate (MIR), which is the main type discussed in this post and what most people usually mean when they say “rebate.”
  • The other is an instant rebate. In chanye’s view, this kind of rebate is basically no different from a discount or using a coupon, because the price is reduced at checkout and no follow-up action is required. In practice, aside from possible tax-treatment differences, it looks pretty much the same to consumers.

Why do rebates exist?

Like any other promotion, the ultimate purpose of a rebate is to boost sales. At the same time, a mail-in rebate requires the customer to complete an extra rebate claim step, and the completion rate for that step usually does not reach 100%. (In real life, chanye has heard plenty of friends say they forgot to submit a rebate claim for something they bought, and by the time they remembered, the deadline had already passed.) So compared with offering a straight discount or coupon, using a mail-in rebate may allow the merchant to earn a higher profit.

At the same time, rebates often come with lots of restrictions, such as quantity limits, claim deadlines, purchase-date limits, and so on. If a claim is found not to meet those requirements, the rebate claim may be declined, and then the merchant does not have to pay that portion. We’ll focus more on these rebate traps later.

How do you get a rebate?

Here, we’re only discussing the general process for claiming a mail-in rebate, since using an instant rebate is basically the same as using a coupon and does not need much explanation.

A mail-in rebate claim usually works like this:

  • Buy the product
  • Fill out the rebate claim form
  • Cut out the product’s UPC bar code
  • Put the rebate claim form, UPC bar code, invoice (printed by yourself), and/or packing slip (usually included in the package) into an envelope (a standard #10 envelope is usually enough)
  • Mail it to the specified address (usually listed on the rebate claim form)

Then, if everything goes smoothly, a few weeks later you will receive either a check or a prepaid card from the merchant. A check can simply be deposited. A prepaid card can just be used like a credit card. Of course, if it is a Visa prepaid card, you may be able to set a PIN, in which case there are ways to unload a Visa gift card for cash, but chanye will not get into that here.

Of course, some rebates can be filed online directly (for example, Staples easy rebate), some do not require you to submit the bar code, and some require you to submit online first and then print the claim form. In short, just follow the steps on the rebate form carefully.

For example, one Kohl's rebate that chanye once claimed had a form like this:

Pay attention to rebate restrictions

As mentioned above, rebates often come with plenty of traps, so be sure to read the fine print carefully to avoid having your claim declined for not meeting the requirements. Here are some common restrictions (or pitfalls):

  • Purchase date: you must place the order within the specified dates
  • Purchase location: you must buy the item from the specified retailer or location
  • Rebate claim date: you must mail, deliver, or submit the rebate claim online by the specified deadline
  • Purchase quantity: you must buy the required quantity (usually up to a certain number of items), and the limit may apply per person, per household, per address, etc.

Conclusion

Rebates are one of the most common promotional tools used by U.S. merchants and manufacturers, but they are also among the trickiest. If you are not careful, it is very easy to miss out. This is especially true for products that are free after rebate or even profitable after rebate (FAR, Free After Rebate). If the rebate claim does not go through successfully, the loss can be significant. In addition, using FAR items can also be considered a form of Manufactured Spending, but chanye will not go into that here.