credit cardsRebates are rarely winning propositions for consumers. Most don’t fill out the forms correctly or on time, and miss out on the savings. Even if you do follow-through, it may be difficult to claim your cash now that the industry is shifting from checks to prepaid rebate cards. The red tape to claim a rebate is getting longer. You have to jump through hoops to qualify for the money back. Now, you have to jump through hoops to use your cash as rebate checks disappear and get replaced with prepaid rebate credit cards.

Drawbacks of prepaid rebate cards

The industry says it made the shift to prepaid rebate cards to make your life easier. With that being said, they know they are issues and are even asking for feedback. Before I get to their response, here’s some of the problems.

1. Activation takes time

Whether it’s a rebate or cash back from a company you no longer do business with, more and more are sending credit cards rather than checks to reimburse you the money they owe you. It may not seem like a big deal, but in this world of mobile check deposits it’s so much easier to cash a check. With some cards you have to call a 1-800 # to activate it and listen to a bunch of crazy prompts just to activate it. That takes time and time is money.

2. Hidden fees with prepaid rebate cards

While these cards may look like a gift card, they are prepaid cards and have very different rules. Gift cards don’t expire for five years. Prepaid cards can expire more quickly, and the fees can begin racking up quickly draining your rebate to nothing fairly quickly.

Every card is different so you need to read the fine print to understand the fees. That fine print may be online or on the rebate form. Don’t expect to always find it on the card.

The Network Branded Prepaid Card Association says the expiration date is a bonus. Unlike checks which expire in 3 to 4 months, rebate cards do not expire for at least 12 months.

3. Credit or debit?

When you get to checkout, these rebate prepaid cards don’t always work. It’s a guessing game at checkout. Do I hit credit or debit? You want to make sure you hit the right one because you don’t want to annoy the cashier and the long line of people behind you. You also want to avoid the embarrassment when your card is declined even though there’s money on it.

Other times, you need to know exactly how much is on the card so the cashier can punch it in. That way you can use a $5 rebate for a $25 purchase. Unlike gift cards which deduct the amount on the card from your purchase price automatically, these cards are so different they are not always accepted or recognized by every credit card system.

If it’s not possible to use a $5 rebate card for a $25 purchase, .you may have to split your purchase into two transactions to make the card work. Most cashiers hate doing that, so you have to find one willing to do it or find an item to buy that’s as close to your rebate amount so you don’t lose any of your free money.

iphone4. Online purchases

If you want to make a purchase online, there may be even more hoops to jump through. Fraud is a big issue so the merchants verify your shipping address is the same as your billing address or they make you verify certain aspects of the card if you are shipping to a friend or someone else for a gift.

To make the purchase go through, you may have to register the card with the bank. One more step folks. Check your card for details if you are denied at checkout. At least online denial is less humiliating than in a store.

Industry responds to prepaid rebate credit cards

The Network Branded Prepaid Card Association says these cards are supposed to make our lives easier. However, they also say they want to hear ways they can make these cards better. Click here to let them know what you think.

1. Easier to replace rebate cards

Companies who use these rebate credit cards argue they are easier to track and cheaper to replace if lost or stolen. The typical check cancellation fee is $25. That’s a losing proposition with most rebates which are under $25.

2. Rebate Cards are universal

The industry also argues that these cards help all consumers regardless of whether you have a bank account. Believe it or not, many people don’t have bank accounts. It’s estimated as many as 40 million people don’t have access to a bank account, or get charged a fee to cash a check.

checkmarkSolution: Give the consumer the option of check or rebate card

For the rest of America, though, it’s much easier to cash a check than use one of these cards. With apps, most consumers can cash a check on their phone. There’s zero embarrassment. Zero guessing. Zero time wasted. How about give the consumers an option when they fill out the rebate — check or credit card?