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What is cashback?
Cashback can refer to a couple of different things. When paying at a store with a debit card for example you can ask for cashback, which means you add an extra amount to the transaction and receive that amount from the cashier as cash. It can also refer to a benefit of some credit cards, where a small percentage of the value of your purchases is accumulated as cashback rewards. This article however is about cashback websites – sometimes also referred to as shopping reward sites.
A cashback website rewards shoppers with cashback for making purchases online. They are the new big thing in the online retail world, which isn’t surprising considering that in 2011 we Brits spent an astonishing £68.2 billion over the internet. E-retail now accounts for 17% of the total UK retail market, as internet access is getting cheaper and easier.
How do cashback sites work?
It may sound a little too good to be true, but if you do a lot of online shopping you can easily make yourself hundreds pounds a year by shopping with one of these sites. They work like this: lets say you’ve seen a watch that you want to buy on the H Samuel website for £200. Rather going directly to the H Samuel site and buying it, go to a cashback site first. The site will have a list of online stores offering various amounts of cashback. So let’s say you browse through the list and find H Samuel, and they are offering 4.5% cashback. You click on a link which takes you to the H Samuel site, and you buy the watch just like you normally would. Now, because you wound up on the H Samuel site via the reward site, they will pay you cashback. 4.5% of £200 = £9. So that’s nine pounds for making a purchase that you were going to make anyway! If you you make a habit of checking your cashback site first before you make a purchase, you can rack up several pounds every time you spend.
But where does the money come from?
The retailer website will pay commission to the referring site as a little thank you for sending web traffic their way. This is usually a percentage of the purchase amount (e.g. Cashback Site A refers a visitor to Online Store B. The visitor buys some things. Online Store A gives 5% of what they spent to Cashback Site A). The cashback site will pass some of this money on to you as your cashback.
Using cashback sites: a few tips
There are several cashback sites out there, so make sure you choose the right one.
Tip No. 1: They should be free. Free to sign up and free to use. Some sites will try to charge a sign-up fee or an annual usage fee. Avoid these sites like the plague – there is just no need to pay when there are better sites out there offering the same service for nothing.
Tip No. 3: Take advantage of sign up bonuses. The big famous sites tend not to give their members any bonus credit for signing up – you have to start from the bottom with zero pounds in your account. Shop around and check out some of the smaller, lesser-known sites which may offer a sign-up incentive.
Tip No. 4: Refer a friend! Again, not all cashback sites do this, but you can boost your cashback earnings by getting a referral bonus for signing up your friends (within reason of course, terms & conditions usually apply).