Shift in tax rebate check spending

Various reports released in the last few weeks have come to the same conclusion regarding what U.S. consumers will be doing with their tax rebate checks this year, and it’s not great news for some retailers.

by Helen Leggatt

Fewer consumers in the U.S. will be spending their tax rebate checks frivolously, if recent surveys are anything to go by. Necessary purchases and debt repayments will be dealt with first by the majority of rebate recipients.

The National Retail Federation has seen a shift in consumer spending plans. Five million more people are planning to use some of their rebate check to pay for gasoline than intended to in February. The cost of food is also taking its toll with almost a million people switching a portion of their rebate check towards food. The National Retail Federation found that consumers will spend around 39% of their rebate check on purchases.

TNS Retail Forward’s recent survey into how consumers will spend their rebate check found that 62% plan to use it for paying off bills or saving, just 41% intend to splash out.

A survey by the International Council of Shopping Centers also found that the majority of consumers surveyed would be paying off debts. The figure they recorded is 51%, up from 46% earlier this year.

"It's unlikely that a lot of consumers are going to take this windfall and do something that runs against the grain of what they feel they should be doing with their finances," said J. Walker Smith, president of the consumer research firm Yankelovich. "If it smacks of an indulgence, I think people are just going to avoid it entirely."