Four great money-saving websites and one to avoid

Rising taxes, soaring inflation and meagre pay rises are hitting us hard in the wallet. So saving money is more important than ever. Thankfully, the internet is a powerful tool for bargain hunters, says Ruth Jackson. She picks four of the web's best money-saving sites, and warns of one to avoid.

By Ruth Jackson-Kirby

published 1 February 2011

in Features

Last December, Google offered to buy the website Groupon for £4bn. That's such a staggeringly huge amount of money you would have thought just about anyone would have agreed the deal on the spot. Not Andrew Mason, the founder of site. He turned it down because he figured it wasn't enough: he thinks Groupon has the potential to be worth much, much more than £4bn.

So where is all this value coming from? Discount shopping. Groupon gathers large groups of people together and gets them buying in bulk for very low prices. It works like this: you commit to buy a product or a service from the site and register your payment details. Then once a critical mass of people have signed up ie enough to make the retailer feel the business is worth offering a hefty discount the deal will go through and your payment will be taken. If not enough people sign up, the deal is cancelled and you aren't charged.

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For example, one of today's deals is eight sessions of IPL hair reduction for £99 instead of £660. But if you are trying to save money you probably won't be spending £100 on hair removal. You'll be getting a razor instead. And you won't be booking a Pilates course. You'll be getting a book instead. There are some restaurant deals available which is nice. But why bother signing up for a group deal and hoping other people will sign up too when you can just take advantage of the numerous two-for-one deals available elsewhere right away?

Like Groupon, Incahoot uses the power of bulk buying to deliver bargains. But this website targets that power at utilities. You'll find deals on home broadband, mobile phones and energy bills. For example, today they are offering home broadband for £4.49 a month with Plusnet that's £2 a month cheaper than Plusnet's standard deal. They've also got discounted iPhone contracts with network provider Three.

This, the biggest and best of the cashback websites, can earn you a small fortune £700 a year, according to The Sunday Telegraph. You sign up to the website and then, when you want to buy something online go to the Quidco site and shop with one of their 'retail partners' which include most of the big name websites you'd usually shop with and when you buy something Quidco will give you a cut of the commission they'll receive from the store. Right now you can get £70 cashback if you buy Aviva car insurance through Quidco, or 7% cashback with House of Fraser.

Better still, Quidco have introduced a facility so you can register your debit or credit card with them and so earn cashback when you are out and about shopping. At present you could earn 2% cashback in Debenhams or B&Q and 4.5% in Halfords, Cineworld or Country Casuals. That makes it well worth taking the few minutes to register your card (assuming you don't mind your personal data being registered in yet another place).

Finally, use Mysupermarket to save yourself a fortune on your food shopping. Shop via the website and, while you are filling your virtual basket with goods from your usual supermarket it will tell you how much your basket would cost at any of the big four Ocado (Waitrose), Tesco, Sainsbury's and Asda. You can save yourself around 10% off the cost of your shopping using the site. Once you've finished and picked which store you want to shop with, you can either order your shop online there and then or print out your list to use later.

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.