Got debt? Reality check on rebate checks

Rebate checks should be landing in mailboxes come May. But it’s hardly looking like the great spur to consumer spending the Bush administration had in mind. Instead, the anticipated “economic stimulus” is looking more like a package for temporarily staving off growing debt. 

A study released this week by The Institute for Financial Literacy reveals that 48 percent of consumers plan to use their rebates to pay off debt, while another 22 percent plan to put the money in savings. So who’s gearing up for the great buy? Only 13 percent of consumers.

In fact, when it comes to being hit from all ends, the study shows debt doesn’t discriminate.

Continued: Click on Read MoreHalf of all consumers from every age bracket (20-somethings on up) are feeling equally burdened. So much so that of consumers 40 and older, only about 10 percent said they’d put the money toward retirement savings over debt reduction.

The Institute for Financial Literacy concluded that “further research” was needed to determine why so many Americans were expressing a preference for debt reduction instead of good old-fashioned consumption. So let’s see if we can help them by offering up just a few facts that shed a blinding light on the current situation:

A few weeks ago, major credit-card companies notified hundreds of thousands of consumers with good payment history that their interest rates could rise to as much as 28 percent unless they paid off the balance now.

A report released this week reveals that home equity has fallen below 50 percent for the first time since 1945.

And the outlook? According to Goldman-Sachs, home prices are expected to decline by 15 percent–and that’s if there’s no recession. And if there is? They could plummet as much as 30 percent.

But, hey–let’s go shopping!