Forget Paying Debt, Rebates Going to Best Buy

A Standard & Poor’s report (via BusinessWeek) doesn’t have a lot of faith, like many commenters on this blog, in US consumers paying off debt and buying groceries with their rebate checks. It says they are more likely to go on a spending spree at Best Buy…even if some credit card debt gets paid down.

“Americans may say that they are going to save the money or use it to pay down debt, but even those who do pay down their credit card balances are likely to build them back up rapidly, in our opinion,” says David Wyss, S&P’s chief economist.

S&P uses this chart to show how consumer electronics in the S&P 1,500 are expected to trend the index’s average. We kind of don’t understand it, but maybe you can figure it out.

Anyway, we would tell you how Best Buy fared in April, but like more and more retailers, they don’t report monthly sales.

So what is it going to be for consumers? Debt and groceries or plasma-screen TVs and Wii’s?


7 Responses to “Forget Paying Debt, Rebates Going to Best Buy”

  1. 1 David Sohn May 8, 2008 at 10:44 am

    Well Ian,
    First of all what is your obsession with Best Buy?
    Secondly, who was it that decided that these stimulus checks were going to be used to pay down debt?
    I may be mistaken but I thought the idea of these checks was to stimulate the economy, and while paying your credit card debt would obviously do just that, I was planning on paying my credit card debt anyhow, when I get my monthly statement. So here I am average Joe and I get a big fat check, quite possibly more or even double what I get paid each week (and according to national average there is going to be a majority of people receiving a check for at least one weeks pay and likely two) and what am I going to do with said found money? Well unless I am in a huge bind and need cash fast, I am going to go out and be frivolous. Buy something I wouldn’t normally be able to afford or treat myself to some other luxuries. It is simple human nature and I think this article is like a fortune cookie stating: “you will have fortunes in the near future” ambiguous at best and while some of us will have small fortunes in the near future most of us aren’t going to put it towards debt.

  2. 2 iritter May 8, 2008 at 10:58 am

    Yo David-
    Just for the record, I’m not obsessed with Best Buy.
    If you take a little peek at the “Category Cloud” section on the right side of the blog, you’ll see the things I post about by category. The categories in larger type are the ones I’ve written about the most.
    So I guess that means I’m obsessed with Wal-Mart.
    And to that I say: “Who isn’t?”
    Thanks for reading!

  3. 3 AJ May 12, 2008 at 9:02 am

    Well, I paid down debt with my check for what its worth. Not one dime of that check made it into a retailer’s pocket.

  4. 4 Susan May 12, 2008 at 9:44 am

    Best Buy? Walmart? Groceries? Debt? Who are you kidding??? My rebate is going directly into my gas tank, and I imagine most consumers will be joining me! Someone has to pay for Jenna Bush’s wedding!!!

  5. 5 Nancy H May 15, 2008 at 11:54 am

    David – have you heard about the foreclosure crisis? And the fact that Arizona is among the leading states in falling home sales, falling home values, and home foreclosures? Obviously, not everyone is paying their credit card debt and mortgages when they get their monthly statement. And the rebate checks will not be a windfall for those many, many, many folks who are about to move all their treasured belongings into their car and walk away from their homes. So, yes, these stimulus checks should be a chance for them to get caught up on their mortgages, or pay down some of the credit cards they’ve been living off of. If you are in a position to be paying all your debt with your paycheck every month, you are definitely not an “average Joe.” You are a very lucky man.
    Sadly, many of those who have nothing and owe thousands will probably be funneling into the Best Buys and Walmarts to buy more things they don’t need….It’s nice to hear (AJ) that some of us have more sense than that!

  6. 6 Nancy H May 15, 2008 at 12:43 pm

    Re: my earlier comment about Arizona…guess you all know what state I live in now. (Doesn’t everyone???) But no matter where you live, you can’t escape the foreclosure crisis in America, or the fact that credit card debt is at an historical high. In October of 2007, the Associated Press reported that credit card debt in America that was 30 days or more past due was over $17.6 Billion.

  7. 7 PG May 19, 2008 at 1:27 pm

    Nancy (re. comment #5)Luck has nothing to do with it. It’s called living within your means. It’s just too bad that the bad decisions on the part of some (like refinancing your home for 125% of its value-come on, what the **** were these people thinking?)end up dragging the rest of the country down with them. And as our society is enamored with instant gratification and the quick fix, I don’t see things improving anytime soon, because tough actions are needed and none of our leaders are willing to do it. The rebate checks are a drop in the bucket, and a couple of months from now most people won’t even remember what they spent that money on. They will have blown it and we will still be where we are today. For the record, mine’s in the bank.

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