A Beginner’s Guide To Cashback

A few weeks ago I was gleefully telling a (thrilling) story about how I had used my Monzo card in a local café alongside a new cashback app called Tail, which I’d downloaded that same day. The meal cost a fiver (with Monzo round-up on) and less than an hour later, I was granted £1.50 back in my account. How’s that for service?

Around me was a sea of blank faces. "They just...gave you money for free?" one person said. "Well no, I spent money, so they gave me money back – that’s kind of what cashback is," I replied. The puzzled faces confirmed my suspicions: some of the R29 editorial team had no idea how cashback works. 

Cashback, for the uninitiated, is money you get given essentially as a reward for spending money. It is an incentive from retailers, from your credit card and from your bank for using their services. Think of it like a 'collect nine stamps get the 10th coffee free' situation from your local coffee shop. Except you don’t have to buy the first nine coffees, just one.

Before we go any further though, it is vital to note the most important point about cashback: the whole concept of cashback exists to entice you to spend money. So it’s super important that you do not take advantage of any cashback offers unless you were already planning to spend that money. A 3% cashback offer at ASOS, for instance, is not an excuse to go hog wild on the site unless you were already going to buy a specific Christmas present or pair of winter boots that you needed. Cashback should not be treated like a permanent sale is on because, as we know, with credit cards, pressure from social media, buy now, pay later companies and near constant advertising, it’s easier than ever right now to get yourself into debt. 

That being said, when used correctly, cashback can be good. And there are plenty of ways to access it which, while possibly sounding boring and complicated, really aren’t at all.

Your bank: Most banks offer some sort of cashback scheme. Take a look at the 'offers' or 'rewards' on your digital banking platform to get started. For instance, I’m with Santander and currently there’s an 8% cashback offer at Morrisons. I will need to 'activate' the offer online but then, when I come to do my weekly shop (say I spend £35) and pay with one of my Santander cards, I’ll get 8% (or £2.80) back. Other retailers on offer currently are Eat (I need lunch), Odeon (100% was always going to see Last Christmas anyway) and more. Some accounts may also give you money back for setting up direct debits to pay bills and more, although not all of them will be continuing this trend. Which? currently rates the Santander current account as best for cashback but probably don’t make that your deciding factor for which current account you use; just check out the offers your existing account has.

Cashback sites: There are plenty of them about but the top two are TopCashback and Quidco. If you sign up to any of them, ask for a referral link or code on social media as both run schemes that benefit both parties – the referrer on TopCashback, for instance, gets £25 while the person who signs up (you) gets an Amazon gift card once you earn over a certain amount. These sites are worth fave-ing on your toolbar (or downloading the Chrome add-ons) because all you need to do to claim is click on the retailer through their site and they automatically apply the deal. Broadband set-up appears to be a chance for a big win, too: Money Diary Facebook group member Danni got £80 for signing up to a cheap broadband supplier and R29 PR Director Nina got £72 for hers.

It's also worth checking out some of the newer app-based cashback companies. Airtime Rewards has deals with high street stores like Boots, Argos, Wilko, Morrisons and Waitrose which when you spend with them, automatically donate money to paying off your phone bill. All you need to do is download the app, put your phone number in and link your card. The aforementioned Tail is an easy one to get started on too, although perhaps not as lucrative as others. Most main cashback sites also have an app.

Credit card: Many credit cards offer cashback rewards for using them, in the way of actual cash or points or vouchers to spend at other retailers. As cashback credit cards go, the Amex Platinum Everyday is Martin Lewis of MoneySavingExpert fame's favourite but it's only useful if you're planning on spending hard over the next few months (home buyers and wedding planners, listen up). You get 5% cashback on the first three months of spending on your first £2000 (so, £100) although you'll need to be planning to keep that spending up to keep reaping the rewards. Other credit cards offer a consistent 0.5% on all purchases up to a certain cap. There are plenty of cashback credit cards to choose from though so make sure you do your research first on the best one to suit your spending habits. And please, please, as it's a credit card, remember to pay it off in full each month to avoid paying interest and only use it for things you need to buy.

Obviously it's not all fun and games. As well as the aforementioned increased incentive to buy (which should set all sorts of warning bells off for those triggered by shopping), there are a few other things to be mindful of before you dive in.

For starters, just like Black Friday deals, cashback options may not always be the best deal available. Just because a broadband sign-up deal is offering lots of cashback, doesn't mean it's the cheapest option – a full-price deal elsewhere could provide the best bang for your buck.

Similarly, be wary about site fees. Both TopCashback and QuidCo charge for their premium memberships (although you can use their basic versions for free). Many other sites charge fees to sign up so it's best starting out with free versions of mainstream sites and then thoroughly doing your research before signing up to any others. The cashback community is HUGE so advice is always out there if you get yourself in the right social media circles.

There are also relatively frequent reports of cashback payments not showing up – less so from the big sites (which have contactable help teams in place) but due to inescapable problems like the link trail being broken to site outages, be aware that not receiving your cashback can occur. Which makes it all the more important to only use cashback sites for things you need to buy already – at least then you're not any more out of pocket than you planned to be.