Get money saving tips in our regular emails

We take your privacy very seriously

How Do Cashback Websites Work

in Saving Money, Student Finance

Cashback websites really do seem to be too good to be true. Websites like TopCashBack or Quidco have millions of members who claim hundreds, even thousands, of pounds a year back from their purchases. But many members do not realise where this money comes from and how retailers and cashback merchants can afford to pass on the savings directly to the customer.

How Do They Work?

From a shopper’s perspective, getting cashback is very simple. Rather than going straight to the retailer, shoppers instead go to the cashback website first. They look through a list of retailers and, if the one they want to shop with is there, they click a link to be taken to the retailer website. They complete the transaction as they normally would and then wait to receive payment from the cashback website. Many shoppers also check cashback websites first for deals and incentives that companies are offering. These are often found on insurance deals or new phone contracts.

What’s Going On Behind the Curtain?

Cashback websites act as a middleman between the shopper and the retailer. The retailer is paying the cashback website for providing them with a customer. The cashback website then passes on some of this commission to the customer. The retailer is able to track where customers are coming from, which is why they have to go via the cashback’s referral link when visiting retailers. The cashback websites are providing customers and traffic to retailers and are being paid to do so.

Cashback can take weeks, or even months, to appear in the customer’s account. This is because the retailer wants to make sure that the transaction is complete. The retailer doesn’t want to pay this commission money and then find that the customer is going to return the product for a refund or cancel a policy, for example.

The Benefit To The Shopper

Cashback can be a nice little bonus for shoppers. Those who regularly shop online, or who need to renew insurance policies and phone contracts regularly, will find that they can get quite a sizable amount of cashback in a year. Some of the most attractive cashback offers can even cover the majority of the cost of products or services.

How To Use Them Effectively

Cashback should be seen as a bonus and not a reason to buy something. If a consumer is buying a product just because of the money they are going to get back, then it really isn’t an effective way to save money. But, if a consumer is swayed to buy something from a certain retailer that they were going to buy anyway, then it is worth considering buying from a different retailer if the cashback is a good incentive. Many retailers are becoming savvy to the lures of cashback and some use attractive offers to disguise poor deals. Make sure it is you who is benefiting in the long-term and not the retailer.

There are many different cashback websites out there, so make sure you sign up for more than one as some have different participating retailers. However, be cautious as some charge admin fees to your account which will be deducted from your cashback. Also, make sure you withdraw your cashback as soon as you meet the minimum withdrawal requirement. If the cashback website changes their policy or goes out of business, you can lose everything that you have earned.