How do cashback sites work and how much money could you make?

The idea of free cash is immensely appealing, but how do cashback sites work and are they worth it?

Cashback sites can offer an effortless way to earn a little extra at a time when inflation is soaring, energy bills are still high and households are desperately looking for ways to cut back and to learn how to save money. 

Abigail Yearley from TopCashback told us: “With the cost-of-living crisis driving prices of goods and services up, it’s important to keep an eye out for deals and incentives that help to save money as you spend – this is where cashback sites come in.

“Cashback sites offer money back on pretty much all of your online purchases – think essentials like utility bills, insurance and groceries as well as things like days out and holidays.

“If you’ve not used a cashback site before, it may take a little bit of time, but if you make it a habit to check whether you can get cashback on a purchase you were going to make anyway – it will quickly start adding up.”

If you need to know how to make extra money, then could cashback sites be worth considering?

 How do cashback sites work? 

The way cashback sites work is simple - whenever you buy something at a particular retailer through the cashback site, you receive a sum of money. This could be a few pennies or as much as £100. Once the money is in your cashback account, you can choose to have it paid directly into your bank account, via PayPal or as a gift card to use at selected retailers. 

Scott Dixon, consumer rights expert at The Complaints Resolver explains: “Cashback sites work by going to the retailer's online store via an affiliate link from a cashback website. They are simply an intermediary which provides affiliate links to various retailers to track your cashback. You still receive your goods direct from the retailer, but you also get a percentage of what you paid as cashback paid to your cashback account.”

Cashback is generally paid once the retailer’s returns period is over, which means exact payment times can vary. 

“It can take anything from a few weeks up to several months to receive the cashback in your account,” explains Adele Kitchen from Ocean Finance. “Some commissions are paid at the end of the month, so if you make a purchase at the start of the month, you’ll have to wait longer than if you bought the item at the end of the month.”

Cashback sites are usually free to sign up to, and to do so you'll need to enter your email address and password. However, there are also upgrade options for which you’ll need to pay a fee, but you’ll receive a greater amount of cashback in return. TopCashback’s Plus membership is £5 a year, for example, while Quidco’s Premium membership is £1 a month. 

Cashback sites generate an income through commercial deals with the retailers - if a cashback site generates a certain amount of sales, clicks or transactions, for instance, the retailer will pay the cashback site a bonus or referral fee. TopCashback says it also earns money from sponsored adverts and promotions on the site. 

What are the best cashback sites to use? 

The best cashback sites to use are:

• TopCashback - this site enables you to earn cashback at a wide range of brands. Cashback can be withdrawn in more than 60 ways, and if you choose a gift card, you can enjoy a bonus of up to 20%. 
• Quidco - this is TopCashback’s biggest rival and it works in a similar way. It can be worth checking both sites to see which offers the best deals at the time. There are a variety of payment methods, with gift cards offering a bonus of up to 20%. 
• Kidstart - this site works slightly differently as the cashback you earn is paid into a child savings account.  

How much money could you earn by using a cashback site?  

TopCashback says its members earn over £300 a year on average by doing their shopping, utility switching and renewing insurance policies through the site. The amount of money you could earn with a cashback site will ultimately depend on the brands you shop with and how much you spend. You’ll usually find that you’ll earn more for larger purchases such as a holiday, furniture or a new appliance. 

You can maximise these earnings by exchanging them for gift vouchers at various retailers, rather than simply having the cash transferred to your bank account. Doing so will typically give you a bonus of up to 20% and you can opt for choices such as Tesco, M&S, Amazon and Argos. 

TopCashback’s Abigail Yearley adds: “It’s also worth looking out for referral schemes. TopCashback members can currently earn £30 by simply referring a friend to join the site. The friend will receive £10 for signing up too, so it’s a win-win for all involved!”

Additionally, it’s possible to earn cashback by completing surveys, getting quotes from price comparison sites and entering prize draws. TopCashback’s In-Store Cashback Offers also lets you earn cashback at selected retailers when spending in store.  

Try combining your earnings from a cashback site with a regular savings habit, like the 1p savings challenge, to maximise your savings pot throughout the year.

Are cashback sites a good idea? 

Cashback sites are an easy and free way to earn a little extra cash and they are completely safe to use. However, there are some pitfalls to watch out for, such as:

• Cashback sites could encourage you to spend more than you need to just because you’re earning cashback.  
• You might not get your cashback if you haven’t cleared your cookies from your browser window before using a cashback site. Ocean Finance's Adele Kitchen told us: “Commission payments to cashback sites rely on using cookies for tracking. The retailer will want to be sure that you made the purchase via the cashback site before you can get money back. Shopping around on the retailer’s website beforehand may result in the commission not being paid to the cashback site – or to you. So, if you visited the retailer’s website first, clear your cookies before going to the cashback site to make the purchase.”   
• Your cashback payment could be rejected if you’re using an unapproved voucher code.
• You’ll need to be patient as cashback payments can take several weeks to arrive in your account. In some cases, you might not get it at all.  

Helen Dewdney, The Complaining Cow consumer champion and author, adds: “It is important to remember that many retailers will be signed up to more than one scheme. There will also be different discounts at different times, so always compare prices with the different discounts before purchasing. Keep a record of what you are saving and where. This will encourage you to keep doing it and make more savings!”