Cashback: how to make money when you’re shopping

Woman holding a credit card © iStockphotosåç
Even small amounts can add up

Getting paid to shop sounds like a suspicious notion – you don’t get money for nothing, after all. But if you make the most of cashback sites, you could save hundreds of pounds a year. Here’s how it works, and why you should make the (minimal) effort to do it.

Cashback websites have been around for over a decade. In that time, avid users have earned hundreds, if not thousands of pounds – I’ve earned £600 over the past nine years. The premise is simple. Sites such as Quidco and Topcashback pay you to shop. All you do is go to the cashback website, search for the shop you want to spend your money at, then click through to that retailer’s website from the cashback website. Your shopping activity on the retailer’s website is tracked by the cashback company. Depending on what you buy and how much you spend, you’ll earn cash, which is paid into your account on the cashback website.

Where does the money come from? Advertising. The cashback site gets paid by the retailer when you “click through” to its website, the same as if you click on an advertisement on any other website. The difference is that cashback sites split that “click-through” revenue with you. For example, right now, if you book a hotel on Expedia via Quidco, you’ll get 12% cashback. That means Expedia is paying Quidco a percentage of the sales it makes from the site, and Quidco is rebating part of that to you.

The amount you can earn ranges from a few pence to £100, depending on what you buy – insurance and financial products tend to pay the highest rate, but even the small amounts can add up. All I’d point out is that if you do decide to use cashback sites, just be sure to withdraw the money as soon as it is paid. That money isn’t yours until it is in your bank account, and many such sites are small and vulnerable to going bust – so grab the cash while you can.

The best cashback websites

Topcashback

topcashback.co.uk

This site tends to pay the highest cashback rates, as it uses bulk purchasing bonuses, which means that it can afford to pay users up to 105% of the cashback it receives.

You can take your earnings either as cash or gift vouchers. Do always check what’s available under the voucher option. Taking this option will often boost your earnings, so it’s worth doing if the vouchers are for retailers that you will actually use.

You can sign up at the site for free and start earning cashback right away, but paying a £5 annual fee will get you a 5% boost on all your cashback earnings.

Quidco

quidco.com

Quidco is one of the oldest cashback websites. It tends to offer similar deals to Topcashback, and it also offers in-store cashback in some physical branches, as well as online. You just need to register your debit card on the site, and then it will pay you cashback if you use that card when you are out and about shopping.

Quidco will also help you get into the habit of using a cashback site as it has a browser bar that you can install on your computer, which will alert you if you are browsing a website that has a cashback offer. The website is free to join, although there is a £5 annual fee for Premium membership, which gets your cashback paid faster, and also offers loyalty bonuses, advertising-free shopping and occasional exclusive cashback rates.

Quidco also runs competitions on the site from time to time that can get you extra cash or reveal exclusive cashback rates, so keep an eye out.

In the news this week…

 Taxpayers are being advised to check their tax codes after HMRC’s introduction of a “dynamic coding” system in July resulted in some individuals facing “significant and aggressive deductions” from their pay, says Vanessa Houlder in the Financial Times. One man who owed nothing was told he owed £53,000. The automated system adjusts pay-as-you-earn codes in tandem with changes in income, and was designed to help around six million people who either end up overpaying or receiving an “unexpected tax bill” at the end of the year – as well as dramatically speeding up the collection of tax debts. However, some of the triggers HMRC uses to adjust codes are causing problems. For example, the system appears to “ignore credit for foreign taxes paid”, resulting in an overestimation of tax due. Meanwhile, underpayments, that have in the past been collected over 12-36 months will now have to be paid in the year the underpayment comes to light, as long the sum does not exceed certain thresholds (eg, £3,000 for those on less than £30,000 a year). Although people will be notified of code changes via online personal tax accounts or by post, most do not check their tax codes, or even understand them, so in many cases “will not be anticipating any change to their net pay” before it happens.

Teething problems are also plaguing clients of Barclays Stockbrokers, which moved 200,000 customers to new accounts on Bank Holiday Monday, says Richard Dyson in The Daily Telegraph. The new service, Smart Investor, requires new log-ins and passwords, which caught many unawares despite the letters that had been sent out. Although Barclays says the new system will see most investors pay less, the service “still lacks many of the features offered by rivals”, including a mobile app.

Drivers who get a ticket for a parking offence or failing to pay the Congestion Charge could face a £160 fine as of next year – a rise of 23% – under Transport for London (TfL) plans, says Rob Hull on Thisismoney. TfL justified the rise by pointing to a 12% rise in tickets issued over the past five years. A consultation will run until 10 November.