A rebate is money that is returned, in some form or other, for something that has already been paid. This may come in the form of a refund or discount, or even in the form of a household appliance with the same value as the money to be returned. It is commonly used in sales promotions and as an incentive to credit card holders.
Mail-in-rebates are quite common. The consumer is contacted by mail and offered a coupon which allows him to claim a certain amount of money. In the case of credit cards, they may send a catalog of products or services to choose from, which the consumer may avail of once he has spent enough using the card and has accumulated enough points.
Supermarkets also offer their own rebate programs. In this case, the customer is issued a rebate card. For every purchase he makes, he can get a certain number of points which is equivalent to an amount of money. After enough points have been accumulated, the customer can then claim the amount and get a price deduction the next time he does some shopping.
Rebates may seem to be a good incentive for consumers. However, discounts can be better in the sense that an individual does not even have to part with his money in the first place. Rebates return a percentage of what an individual has already spent.
On the other hand, discounts already lower the price of the product before it is bought. Also, even if one gets a rebate on a purchase, the fact that it had to be paid for the full purchase price means that the taxes were already added to the full amount. In the case of a discount, taxes would have been applied to the discount price already, thus leaving the consumer with more savings.
Some US companies have a policy of making it difficult to obtain your rebate. They give you complicated instructions for mailing in a rebate, hoping you’ll forget to do it. Some companies also make the terms of their rebates unclear, or stall sending you a rebate payment. Watch out for this kind of behavior—it is sadly common.