What is a Rebate Card?

Lily Ruha

A rebate card is a debit or credit card that allows a customer to pay for products or services. A gift card is one form of rebate card, where the card is pre-paid and can be used at a specific store. Credit cards that offer discounts for gas or merchandise are considered rebate cards because they offer cash back for these purchases. Many companies offer rebate cards as a way to reward customer loyalty and/or encourage further business from customers.

Gifts cards are a type of rebate card.
Gifts cards are a type of rebate card.

Gift cards are the most common type of rebate card. With this type of card, the recipient can use the card to buy a product or service of his choice. The usage of the card is typically limited to one store or company. Dollar amounts of rebate cards are usually determined by gift card buyers as a one-time purchase. Many stores allow gift card recipients to apply the gift card toward a more expensive product or service, as long as they pay the difference in price.

Some credit card companies offer cards with a rebate program.
Some credit card companies offer cards with a rebate program.

Some credit card companies offer cards with a rebate program. A credit card company might encourage cardholders to purchase gas using their credit cards, for example. For doing so, cardholders might receive cash back in the form of a specific percentage of the overall amount spent. This typically results in savings for the shopper, who then receives a discount when buying everyday necessities. Credit card companies benefit in this way from having cardholders choose their credit cards over that of their competitors.

While rebate cards have the potential to offer savings and simplify gift-giving, there are some disadvantages associated with these cards. Some companies require that the rebate card be used prior to a specific expiration date. This can result in lost funds if a gift recipient does not use the rebate card in time. Additional loss of funds can result from using only a portion of the funds on the rebate card, as many companies will not pay out the remaining amount in cash.

In the case of a credit card that offers rebates, if a cardholder is not careful he might end up paying higher dollars for his everyday purchases. If he is using the credit card to pay for gas in hopes of getting a rebate, this plan is only financially sound if he pays off his card balance in full each month. Once interest accumulates for his gas purchases, the cardholder might realize that he was better off paying for his gas in cash rather than charging it to a credit card with a rebate program.

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