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Tempted by a great rebate offer?

It's only a rebate if you get the money back. With the holiday shopping season around the corner, retailers will be dangling rebates to get shoppers to buy smart phones and other shiny new toys. But the offers can come with catches that limit your savings.

The premise of a rebate is simple enough: Pay the full price at the register and get money back after filling out some paperwork. A check is issued within weeks and everyone is happy.

Yet that's not always how it plays out.

If you're considering an offer, here's what you should know:

•A Little Background

Before diving into the specifics, understanding the psychology behind rebates may help shape your buying decisions.

The offers have a twofold benefit for businesses; rebates mobilize shoppers to buy, yet companies don't have to give everyone the advertised discount.

That's because even in the best case scenarios, only about half of eligible consumers bother redeeming rebates, according to Hal Stinchfield, CEO of Promotional Marketing Insights in Minneapolis.

One of the biggest factors that influence whether shoppers redeem a rebate is the perceived value of the discount.

For example, few would bother mailing in a rebate form for $1 on a $100 purchase. But redemptions would likely go up substantially for a $1 rebate on a $2 purchase.

Customers are also more likely to mail in rebate forms if they're handed the necessary materials at the register. If shoppers have to tear off a slip on a drug store shelf, redemptions go down dramatically. That's despite the negligible difference in the effort required to get the rebate.

Ultimately, keep in mind that a rebate is a psychological pricing strategy to increase sales. The discount doesn't reflect demand for the product; rebates are often offered as soon as a new item hits shelves.

•Before You Cash In

If a steep rebate offer catches your eye, it's worth shopping around before you act.

Some discount chains such as Best Buy and Target don't offer rebates, citing the inconvenience they pose for customers. Yet their prices may be as competitive.

So if a cellphone is selling for $150 after a rebate at one store, you might be able to get it for a similar price without having to go through the hoops of the rebate process, said Stephen Baker, who specializes in consumer electronics for the marketing firm NPD Group.

And if it's a manufacturer offering the rebate rather than a retailer, you can still mail away for the discount.

Before you act on a rebate offer, ask what form the refund will come in. You might not be thrilled if it comes on a store gift card. Stores like to offer gift cards because they spurs shoppers to return to buy more.

Also make sure there's no chance you'll want to return the item, since you won't be able to once you start the rebate process. That's because customers typically need to cut the bar code from the packaging and mail it in with their paperwork.

Otherwise, it's a good idea to mail in rebate forms sooner rather than later. The redemption deadline is usually within 90 days or so. But the number of buyers mailing in redemptions starts falling off after about six weeks, suggesting that procrastination makes it less and less likely that you'll get around to it.

•Using the Rebate

Once you get a rebate, the next step is making sure you use it.

This is a little more complicated than it sounds now that more rebates come on prepaid cards. These cards have a Visa, MasterCard or American Express logo and can be used wherever those cards are accepted.

The card may even bear your name, but don't be fooled into thinking it provides the same protections as a credit or debit card. The entire value of a rebate card could be lost unless a stolen card is reported to the issuer in as little as 24 hours.

Rebate cards also aren't subject to the new federal regulations on gift cards. The rules ban inactivity fees in the first year and expiration dates for at least five years after the card is issued.

But the expiration date on a rebate card may be much sooner. For example, the rebate cards Verizon is currently issuing for select phones expire after just one year.

Customers can request replacement cards with the remaining balance at no cost. But that's another hassle you might not want to deal with.

The exact terms of a rebate card can vary significantly depending on the program, so carefully read any accompanying materials.

One way to avoid losing any value on a rebate card is to go to your bank and cash it or deposit it into a checking account. Visa says not all rebate cards can be cashed or deposited, but the materials that come with the card should note if that's an option.

This comes with a couple benefits. To start, you earn interest on the money by putting it into a savings account. Or you could earn rewards by spending the money through a credit or debit card.

Cashing or depositing a rebate card also eliminates the possibility that you won't use its entire value. As with gift cards, there's the chance you could tuck it away into a drawer somewhere and forget that there's still money on it.

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