Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Rain Check

What it is:

A rain check is a written promise from a seller to a buyer. It guarantees that a buyer can purchase a product for a certain price at a later date, usually because the item is out of stock.

How it works (Example):

Let's say the chocolate chips are on sale for $2 a bag at Walgreens this week. John Doe goes to Walgreens for the deal and finds the shelves bare, thanks to some extreme couponers. He asks the store for a rain check, which issues him a slip of paper allowing him to buy up to five bags of chocolate chips for $2 each any time in the next two weeks. John waits a week and comes back for the chips.

Why it Matters:

Rain checks keep customers from defecting to the competition. Some states require stores to make good on their advertised offers by providing rain checks, because when a store advertises an item on sale, it is expected to have that item in stock. If rain checks didn't exist, stores could run ads for cheap items and never have to honor the offers. (Unfortunately, this rule often doesn't apply to auto dealers.) In some cases, vendors must print the words "No Rain Checks" in their advertisements if the stock is truly limited, putting customers on notice.

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