Online bargain hunters who buy goods or services through one of these sites can earn money back on their shopping. The sites offer cashback on a whole range of purchases, including holidays, cosmetics, mobile phones and insurance, thanks to link-ups with a broad spread of retailers. In some cases, shoppers can earn as much as £1000 per year.
Natasha Rachel Smith, consumer affairs expert at TopCashBack, which attracts approximately 4.5 million visitors every month, says: "Cashback sites are a great way for people to earn money from their spending. As online shopping is becoming an integral part of people's shopping patterns, these sites are inevitably becoming the first port of call for people who want to save money."
So how do cashback sites work? You usually have to register to start shopping, and some sites even offer bonus payments when you register for the first time.
However, watch out for fees. A number of sites charge a registration fee, which will eat into any cashback reward. For example, Quidco keeps the first £5 of cashback you earn each year.
You are then ready to start shopping. Let's say you want to buy a washing machine. You simply log on to a cashback site such as TopCashBack or Quidco, click through to an online retailer, such as Currys or Appliances Direct, and make your choice.
The retailer is grateful for the online business, so it sends a commission payment to the cashback site.
The website then passes some or all of the money to the customer.
Most sites do not allow you to collect your cashback straight away. You usually have to wait until you have earned a certain amount, typically £20. But don't let your rewards build up. If you always withdraw your cash when you reach the threshold, you know that the money is safe. Jenny Keefe of MoneySavingExpert says: "Some people store their money in a cashback website, but it is not a bank account. Our advice is to take the cash as soon as you can."
Cashback sites benefit the retailer, the site operator and the customer, so everybody's happy. Or are they? Some people report problems. For example, it can take several months for cashback payments to reach your account – and sometimes they never arrive. In a recent survey, about 40% of shoppers had made a complaint about non-payment.
Keefe says: "The cashback is not guaranteed, so it's better to think of the money as a bonus rather than a certainty."
If you have not received a payment, it's a good idea to check your "cookie trail". Cookies are online gizmos that track your internet visits, and there must be a clear trail between your computer, the online retailer and the cashback site if you are to earn your money. So, if you have shopped direct with the online retailer before, you might have to delete your cookie history to make sure that the trail now includes the cashback site.
You might also find that you are paid less than you were expecting. The cashback is usually expressed as a percentage of the purchase price. But this definition can vary. Most sites, for example, do not pay cashback on any delivery costs.
VAT is also often excluded. It's not always easy to choose the best cashback site. The biggest have links with more than 3000 retailers, but the partners vary, as do the cashback rates.
Some retailers also offer different rates according to the item you purchase. For example, you might earn 3% cashback on a washing machine but only 1% on a hair dryer.
Of course, there is nothing to stop you from registering with more than one site, as long as you understand the terms and conditions, as well as any fees.
Smith says: "Over the past decade, and particularly since the recession, perceptions have changed about discount shopping.
"Consumers now embrace frugal shopping and many people are unwilling to pay the full price, fully aware that, with some research and patience, they could make a substantial saving."
It can be exciting to earn cashback on your purchases, but don't let the excitement blind you to a bargain.
A washing machine that costs £300 is still more expensive than a machine at £200, even if it comes with 3% cashback.
"You should be particularly careful if you are shopping for insurance or an energy deal. They often pay generous amounts of cashback but it's important to make sure that the policy or tariff is right for you.
Also bear in mind that cashback sites are not regulated, so it's best to stick with the big names that are tried and trusted.
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