They go by different names -- rewards malls, shopping portals, and cash-back websites -- but all offer the same result: post-purchase refunds. A promise of cash back just for clicking on a link and then shopping seems too good to be true. It's not. In fact, cash-back websites can stack with coupons, sales, and rewards credit cards to give consumers even greater savings. Cheapism.com explains how the system works.
When visiting a cash-back website, shoppers are generally greeted with two messages: a request to create an account followed by a list of online retailers or categories of goods. After creating or logging into an account, the shopper searches for the desired online retailer, clicks the link, and is redirected to the retailer's site. Orders are placed as usual and the consumer then receives a percentage of the total purchase price as a refund into their account on the cash-back site. The money can be withdrawn via PayPal, check, or as a gift card after a waiting period (usually several months). The delay reflects the time it takes for the retailer to pay the cash-back site and as a precaution in case goods are returned.
What goes on behind the scenes? The cash-back website receives a commission for referring a customer to the online store. The referral is tracked using cookies when a shopper clicks on the link on the cash-back site. The cash-back site keeps a portion of the referral fee and passes the rest on to the shopper.
Some cash-back websites distinguish themselves with little extras. MainStreetShares offers members cash back as well as shares in the company; if the site is ever sold, members will receive a portion of the sale price relative to the number of shares they hold. The returns from shopping through Upromise, a partner of Sallie Mae, are intended to cover the cost of college and can be deposited directly in a 529 College Savings Plan or high-yield savings account. GoodShop takes the cash back a member earns and donates it directly to a charity of their choosing.
How Much Cash Back?
The percentage sent to users depends on the cash-back site, the online retailer, and sometimes even the type of goods they're buying. Amazon may offer up to 6 or 8 percent cash back at times, but often only for select items, such as shoes, clothing, toys, or Amazon Local deals. A shopper might also find that one cash-back site offers 6 percent from Target while another offers 4 percent. Many cash-back sites arrange week- or month-long specials with increased returns from select retailers.
Brent Shelton, a public relations director for FatWallet and Ebates, notes that cash-back rates from these sites can fluctuate throughout the year, depending on seasonal promotions, and for specific audiences seeking seasonal sale items. Each site claims its own membership base, and different deals can be cut for different demographics.
Airlines, hotels, and credit card issuers maintain similar shopping portals that function just like cash-back websites but offer members points or miles in lieu of dollars. For example, the AAdvantage eShopping mall currently gives members four miles for every dollar spent at Sephora. Another example is Discover Deals for holders of Discover credit cards, which lets them earn bonus cash back (on top of what the credit card offers) that can be applied to their statement balance.
The point and miles portals can be useful for people who travel infrequently. Miles and points balances often expire after 18 to 24 months of inactivity, and one small purchase using the program's shopping portal can reset the clock.
Which Cash-Back Site Is Best?
There are dozens if not hundreds of shopping portals out there and it would take hours to compare the reward rates at each before deciding where to shop. Things get even more complicated when calculating the value of airline miles or hotel points. Luckily, there are several comparison services: Evreward, CashbackHolic, and SavingCashback let users search for a retailer and display the current cash, points, or miles offerings from different shopping portals. They don't calculate the cash value of miles or points, but it's an easy way to see which rewards malls are most rewarding.