You are missing out on free money if you shop online and don’t use cashback websites. These reward you with a percentage of what you spend in cash.
So if you spend £100 on clothes and the cashback rate is 5 per cent, you get £5 in your pocket. Over the course of the year these little payments all add up.
And if you were planning to make those purchases anyway, then you really are getting something for nothing.
Money in the bank: All you need to do is make a few simple changes to the way that you spend your money and you’ll have found yourself a brand new source of income
You can earn cashback on everything from clothes and homeware to energy bills and holidays. Some websites will also reward you when you shop on the High Street.
All you need to do is make a few simple changes to the way that you spend your money and you’ll have found yourself a brand new source of income.
Here we show you how to get started…
CHANGE THE WAY YOU SPEND YOUR MONEY
The idea a website will pay you for spending sounds too good to be true. But it isn’t.
They are paid a commission by retailers for referring your business and are just returning part of that to you. They also make money from retailers paying to advertise on the site.
You need to sign up to websites such as TopCashback and Quidco. They are free to join — you just need to provide your name and email address and set up a password.
Once you’ve done this you simply search the website for cashback offers at your favourite retailers. There are more than 4,600 firms listed on topcashback.co.uk, while quidco.com says it has partnered with 4,500 brands.
Both claim to have millions of members signed up worldwide. Quidco says the average user earns around £305 a year.
The key is remembering to check both sites to find the best cashback rate on offer before buying anything.
You might even want to set one of them as the default home website on your laptop so that you don’t forget to look for cashback before you shop. Or if you find you keep forgetting, try downloading a ‘notifier’ app from the website which reminds you if you are shopping somewhere that offers cashback.
Once you have found a cashback deal with a retailer you want to buy something from, click on the link provided. This will take you to the store’s own website where you can go on to buy your goods as usual.
It might not look any different but when you visit the shop via the cashback site it records your visit and tracks any spending you make so it knows how much cashback to reward you with.
If you go direct to the retailer you will not get anything.
You can also earn money when shopping on the High Street by linking your debit or credit card to your cashback account.
This means that every time you swipe your card in a shop offering cashback, you will automatically get paid.
If you don’t want to share your card details, you can take a picture of your receipt and upload it to your account.
CHOOSE VOUCHERS TO EARN MORE
Any money you earn will be paid into your online cashback account. It can take anything from a few days to several months to appear.
Cashback cards pay a percentage of what you spend, usually annually, into your bank account
As soon as it does you should be able to move it into your regular bank account to spend as you wish.
You may be required to earn a certain amount before you can access it. For example, if you are moving money into your bank account Quidco has a minimum withdrawal amount of £1, but with TopCashback it’s just 1p.
If you are willing to be paid in vouchers you can earn even more.
TopCashback, for example, boosts your earnings by as much as 20 per cent if you choose to be paid in Amazon gift cards. It also offers a 15 per cent top-up for taking Debenhams vouchers instead of cash, a 12.5 per cent bonus for picking a Gap gift card and 5 per centfor a Tesco one.
Quidco will give you a top-up bonus of 8 per cent if you take M&S vouchers, 4 per cent for Argos vouchers and 8 per cent at coffee chains Starbucks and Costa. And this is just a small selection of the options available.
Whatever you decide, it is best to withdraw your cash as soon as possible. If anything were to happen to the firm holding it you risk losing everything because there is no protection in place.
You should also make sure you buy what you need from the store where it is cheapest — not the shop offering the best cashback deal.
And if you are using a voucher code to get a discount, check the terms and conditions to ensure you can earn cashback on top.
If not, you will have to work out which offers the greatest saving.
GET PAID FOR SWITCHING DEALS
The amount of cashback you can earn varies depending on where you shop and what you buy. According to TopCashback the average rate of cashback across the retailers on its website is 7.5 per cent. This would net you £7.50 for every £100 you spend.
The most generous offers are typically for customers taking out new mobile contracts, insurance policies and energy and broadband deals. Hotels and holiday packages can also reap greater rewards.
At TopCashback, for example, you can get £50 cashback when you buy a new building and home contents insurance policy with Aviva, or £35 when you take out a new pay monthly contract with O2 worth £15 to £24.99. Customers can also get 10 pc cashback when they buy a Samsung TV that is 32 inches or smaller from Currys PC World.
At Quidco you can get up to £50 cashback when you buy pet insurance through Pet Protect and 2.5 per centback on purchases with Tesco Direct.
Those looking to switch their energy bill could earn £95 in casback if they opt for the Npower dual fuel Super Fix 2021 tariff.
What you buy also affects how long it takes for the cashback to appear in your account. Quidco gives shoppers an estimate of how long they can expect to wait for payment. At Debenhams, for example, it says the payment speed is less than four months, and at Tesco Direct it’s less than five weeks.
If you make a reservation at a hotel through Booking.com you’ll have to wait until 12 weeks after your stay.
So if you book your holiday six months in advance that means you could be waiting up to nine months for your cashback.
THIS IS MONEY’S FIVE OF THE BEST CREDIT CARDS
USE THE RIGHT BANK CARD
Earning cashback from your bank for spending on your credit card is sadly not quite as easy as it once was.
New rules that cap the amount banks can charge for card transactions means that there isn’t quite as much money left to give back to customers in the form of cashback deals. But all is not lost.
James Daley, manging director of consumer champion site Fairer Finance, says: ‘For the savvy shopper, there are still little pots of cash to be picked up by using the right card at the right time.
‘Deals just aren’t as good as they once were so you need to be much more strategic about what card you use and when you use it.’
Among the best cashback credit cards currently available is the American Express Platinum Cashback Card, which has an introductory offer of 5 per cent cashback for three months on spending of up to £2,500 a year.
After this the card, which has an annual fee of £25 and standard interest rate of 28.2 pc (APR), pays 1 pc on spending of up to £10,000 a year.
The Smile Classic Credit Card Visa has a much lower APR of 16.9 per centand no annual fee, but its cashback offer is lower at 0.25 per cent.
The Tandem Cashback Credit Card Mastercard has an APR of 18.9 per cent and offers customers cashback of 0.5 per cent, according to data analysts Moneyfacts. Before signing up for a card, think carefully about where you shop.
Some cards are aimed at shoppers who spend with a particular retailer, which won’t be useful if you’re not a regular customer.
Other cards have great introductory deals but are less generous after an initial period, so users should make sure they plan to do the bulk of their spending within the specified window of opportunity.
Borrowers should also be aware of any fees which could wipe out the rewards they get, and make sure they clear the balance in full at the end of the month in order to avoid interest charges.
Another option is to sign up for a current account that pays cashback.
One of the most popular deals is the Santander 123 account that allows you to earn 1 pc cashback on your water and council tax bills, 2 per cent on gas and electricity bills, and 3 per cent on mobile, landline, broadband and TV bills.
You can get also earn between 1 and 2 per cent cashback if you have a mortgage or home insurance with Santander.
The TSB Classic Plus Account gives customers £5 cashback if they make 20 debit card payments in a month, and another £5 if they have two monthly direct debit payments made from the account.
These rewards could add up to £120 a year.
Meanwhile, the NatWest Reward Account pays 2 per cent cashback on household bills — it estimates that customers who spend £345 a month on bills could earn £83 a year.
Before you open an account be sure to check whether there are any terms which may stop you getting as much cashback as you had hoped.
For instance, some banks require you to deposit a minimum amount each month or to have at least two direct debits paid from the account.
Credit Card Reality Check Calculator
Warning: This calculator does not factor in the time it would take to repay a credit card debt where the minimum payment is calculated as a percentage.