Our mothers may have told us that there was no such thing as a free lunch. But it turns out they were wrong. These days it really is possible to lay your hands on free money. How? By visiting the wealth of cashback websites or by using a cashback credit card for starters. Or, if you don't want to have to spend money to get money, just by switching your current account.
Switch current accounts
In the last six months, I've made £300 just by switching bank accounts twice something which took about 30 minutes of my time in total.
Offering a cash incentive to get people to switch current accounts has become increasingly popular. The best deal on a purely cashback basis comes from First Direct who offer new customers £100 for joining. That's nice, but it's only half the story. You can then get another £100 under their "satisfaction guarantee" if you leave after six months.
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That's an easy £200 if you switch to them, stick around for six months then, satisfied with the service or not, switch again. And, if you time the second switch correctly, you could get a further £100 by switching to Alliance & Leicester's Premier Current Account. This is one of the best current accounts on the market as it offers an interest-free overdraft for the first year and 0.5% in-credit interest, which is better than most competitors. They don't always offer a £100 joining incentive, but it is available at the moment.
Flex the right credit card
If you clear your credit card balance in full every month and therefore don't need to worry about getting the cheapest interest rate on the market, a cashback card - which pays you money every time you use it - is an excellent way to get rewarded for your good habits.
The best one is the American Express Platinum Cashback card. This offers 5% cashback on all purchases in the first three months up to a maximum take of £100. After that you get 0.5% cashback on the first £3,500 spend per year, 1% from £3,501 to £7,500 and 1.25% from £7,501 upwards. There are drawbacks. First you have to earn £30,000 a year to be eligible for the card at all, and second, you have to spend at least £3,000 a year on the card before you earn any of the cashback. It is also worth noting that the APR is 19.9% - higher than that on many other cards.
If that doesn't work for you, consider the Egg Money World MasterCard. This offers 1% cashback on all spending, up to a maximum of £200 cashback per year. The downside? There is a fee of £1 a month on this card so you'll need to spend at least £1,200 a year on the card just to break even. The typical APR on the Egg card is 17.8%.
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Make the most of cashback websites
If you regularly shop online then it is worth checking to see if you could be earning money when you shop by using a cashback website.
The idea behind these sites is simple. You register to use one. Then every time you buy something online, you access the site you want via a link on the cashback site. The retailer pays a commission to your cashback site on the value of the sale and the cashback site then gives you part of that commission. And it isn't just traditional shopping that you can earn cashback on. There are also rewards on offer when you buy some financial products. "You can earn £20 to £30 when you take out insurance policies," says Andrew Hagger of Moneynet in The Observer. Just make sure you are getting the most suitable insurance deal for you.
The four most popular and well-established sites in the UK include TopCashback, Rpoints, GreasyPalm and Quidco. The latter was recently voted the best cashback website by Lovemoney.com readers. This sounds great - and it is - but do make sure that you are still buying the products you want at the cheapest possible price. There is no point in buying something via a cashback website if you could have got it cheaper elsewhere unless of course the amount you get in cashback cancels out the price difference.
To make the most money it is usually best to pick one cashback site and use it regularly in order to build up a good sum in commission: several sites won't let you cash in your rewards until you have amassed a set amount, which can sometimes be as much as £20. The exception to this is Quidco, which has no minimum.
Using cashback can be a handy way to cut the cost of your shopping, but don't expect to give up your day job and live off your rewards - we're talking a little bit extra, not thousands of pounds.
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Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings 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.
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