What is cashback?
As most of us continue to shop online, traditional coupon clipping is becoming a thing of the past. Now, cashback apps and discount providers offer an easy way to economize your shopping. You can make money on everyday items or activities purchased either online or in-store. Perhaps you’re saving for a home, holiday, car, or a well-deserved treat for yourself. Whatever it is, you can earn while you shop.
From cashback apps to credit or bank card reward programs, cashback providers offer flexible savings on your daily shopping, splurge, or service purchases from well-known retailers.
If you’re new to cashback savings, this guide will answer some of your basic questions and help you avoid cashback scams and risks.
So, what is cashback?
Cashback apps and providers give you money or points after a purchase is made. You can typically get cash back through independent apps or through dedicated cashback credit cards. This differs from coupons, which save you money instantly at checkout (more on that later).
When you use a cashback provider, the provider pays you part of the commission or fee they receive from a retailer back to you. Some cashback providers offer points, travel rewards, or bonus programs to calculate the cashback. You can sometimes get free cashback by entering prize drawings or activities like completing surveys.
Sounds like a sweet deal, right? It is! But keep in mind that some providers may require you to hit a certain cashback limit before paying out, so take care not to overspend to reach the withdrawal limit. Most cashback programs follow the same formula, but the process differs from company to company, so check reviews before you commit to a cashback solution.
Where to get cashback?
So what’s the difference between a cashback app and a cashback credit card? We’ve got you covered.
Cashback apps
Cashback apps offer a flexible way to save in-store or online. Users can sign-up via apps like Hellocashback, BeFrugal and Rakuten to get cash or points redeemable for cash. And it’s not just everyday purchases that can bag you a dollar or two, you can save on household utilities, insurance, cell phones, and vacations. You can also gain access to hundreds of cashback offers for your regular products like groceries, clothing, technology – the list is endless. You buy it, you earn from it!
When you shop in-store, you'll be offered a few options to get your purchase credited to your account. Either upload your receipt or link your card, then shop away.
What to ask yourself when choosing an cashback app:
Frequency – will you get paid instantly, or are there payout periods and other conditions?
Amount – do you need to reach a limit or wait before cash is deposited?
Method – will it be PayPal, gift cards, credit?
Conditions – is the cashback percentage dependent on the item, retailer or department?
Before you choose an app, make sure it suits your overall needs and requirements. Certain apps pay you for in-store shopping while others only operate online. Some reward in points and others directly in cash to PayPal or your checking account.
Credit and bank card reward programs
If you have a credit or checking account card you may be able to get cashback, points, or miles rewards. Whatever you're spending on, be it shopping, or flights, with the right card you can get money back where you spend the most.
Cashback cards reward you a percentage of each purchase you make just like the cashback apps. Your money is accrued in an account to pay off your credit card or deposited into your bank. Points and miles tend to be better value overall, however, cashback is generally the easier way of saving and redeeming money in this instance.
Consider sign-up bonus options when choosing your card. The bonus period normally runs within the first few months of opening an account and typically the rewards are points, miles, or cashback. Usually, you need to achieve a minimum spend to qualify for the bonus.
However, there are a few things to be aware of when it comes to cashback cards. Many have an annual limit of how much cashback you can get. There are some truly unlimited cashback credit cards, but cashback may only be valid on specific spending categories or there may be exclusions. Read the fine print before committing to a card to know just how unlimited the cashback options are.
Finally, be aware of annual fees and interest rates. Most cashback credit cards are free to start, but may have an annual fee after the first year. And as with all credit cards, be sure you have the funds to cover your bill. It may come due before you receive your cashback, and costly interest fees will negate your cashback savings.
Instantly save on purchases with coupon discount sites
Throw out the coupon-clipping scissors! If it sounds like too much work to sign up for a cashback app and you're wary of adding another credit card to your wallet, you can use online coupon aggregators like Honey and Wowcher that will find the best coupon for your purchase.
Savvy bargain hunters can install a browser extension like Smarty's to seamlessly discover and apply coupons when you’re shopping online.
How much money can you save with a cashback provider?
The amount you can save depends on how much you shop, what you buy, and the cashback offer.
Cashback app Ibotta claims the most active users can save between $10 - $20 per month. But Ibotta and other apps don’t put a limit on the amount of cashback you can get, so you could get much more back if you’re strategically spending. (But again, be careful not to overspend just to get a deal. If you wouldn’t have purchased something at full price, you aren’t saving money purchasing it at a discount.)
As previously mentioned, some cashback credit cards have caps on the amount of cashback you can redeem annually or quarterly. And some of the unlimited options have purchase limitations or exclusions. But theoretically, you can get cashback on most or all of your purchases using the right card(s) so your saving potential is unlimited.
You can mix and match your cashback options to save money too. Try using a cashback card to buy while earning points through a cashback provider as well. Check the small print as there may be some limitations on your ability to combine rewards but creative combinations will maximize your cashback.
Cashback risks and scams
Don’t forget about taxes! Although most cashback earned from making a purchase is not taxable, cash that doesn’t require a purchase, such as a sign-up bonus, may need to be reported as income. To avoid landing in hot water, check with your local tax authority or accountant to clarify what cashback options are taxable.
As with all online offers, be very cautious about what you’re signing up for and the personal details you’re supplying. Cashback scammers are adept at trapping people with big savings offers. Scams may include fake retailers offering suspiciously high discounts or cashback offers that lure you in to get your credit card information. If a deal feels too good to be true, then it usually is. Trust your gut and check reviews to make sure the providers are legit.
Aside from this, not all cashback sites have the best bargains out there. A few cashback sites charge fees for premium membership for improved cashback offers, enhanced customer service, and bespoke promotions. While these offers may be legit, they may not save you money. Spend some time calculating how much more you’ll save with these special offers and make sure it’s worth it.
Do your research before using a cashback app or provider
Before you dive into a cashback app or provider sign-up, do lots of research. It can be tempting and easy to spend more than you normally would to get the cashback or win bonuses. But be mindful you don’t wind up in debt or overspending as a result.
To find out how other people have navigated the world of cashback apps and discount providers head over Trustpilot’s reviews to discover trustworthy cashback businesses.
Trustpilot is a review platform that is open to all. The companies and profile pages referenced in this article are provided for informational purposes only and are not recommended, endorsed by, or representative of the views of Trustpilot. The Trustpilot companies linked in this post are expected to abide by Trustpilot’s Guidelines, but have not been reviewed for compliance.
