Free money is available through doing your online shopping via cashback websites ? but do follow some sensible rules
Rising VAT, a surge in inflation and talk of interest rates increasing within months mean millions of people are facing a serious squeeze on their household finances. Most of us are probably looking at ways to shave costs, and if you regularly shop online, cashback websites are worth investigating as they can provide an easy way to save money on purchases.
These sites pay a cash reward when you click through them to shop at specific online retailers. The rewards on offer ? which can be a fixed sum or a percentage of the price ? could add up to hundreds of pounds a year for consumers who do a lot of online shopping and buy high-reward items such as insurance policies, holidays and mobile phone contracts.
The way these sites work is simple. First, you sign up as a member on the site. This means giving bank details and should be free ? avoid sites that charge a registration fee. Once you have set up your account, whenever you shop online you visit the same retailers as usual but via a link on your chosen cashback site. When you make a purchase, the retailer typically pays a commission into your account at your cashback site, which in turn sends your cut direct to your nominated bank or PayPal account.
The two biggest players in the cashback market ? Quidco, with more than 1 million members and 2,800 retail partners, and Top Cashback, with 750,000 and 2,650 respectively ? pass on 100% of the payments they receive from retailers to members, though Quidco keeps your first �5 earned each year to cover costs. Both say the average cashback earned is �250 per year. Other sites include Give or Take and CashbackNetwork.
If you are going to buy an item from a retailer anyway, and they are on the cashback site, you might as well take the free money. For example, if you are planning to book a Eurocamp holiday for this summer, you will get back 4% of the cost of your trip by using Quidco. And as of this month, you can earn 4.5% cashback at many NCP car parks (those at rail stations are excluded, unfortunately), which seems a pretty good deal if you regularly use a particular car park.
Consumer group Which? says this "money for nothing" makes commercial sense as "the retailer is happy to pay a sum to the cashback site for 'introducing' business it might not have otherwise received". But there are potential pitfalls to be aware of.
Don't be lured by a juicy cashback reward into buying an item you could get cheaper elsewhere. Sixty pounds cashback on an insurance policy costing �200 is no bargain if you could get the same cover elsewhere for �120. Whatever you are buying, the rule is to identify the right product first, and only then check if you can get an even better deal by going through a cashback site.
These sites are not regulated, which means you have no compensation rights if one goes bankrupt owing you money in the form of cash rewards, as was the case for some members of two sites: Cashback Kings and Rpoints, which collapsed in November.
Market leader Quidco, with around a 55% share, and Top Cashback, with around 40% ? which both launched in 2005 and have been growing steadily since ? say they are financially secure.
But there are some newer, smaller cashback sites around which may prove less so. The best way to protect yourself against becoming a victim in any future collapse is to withdraw funds from your cashback account regularly; don't leave it sitting there. Be aware that cashbacks can take a few weeks to reach your account but some, particularly those linked to insurances, which have a customer cooling-off period, can take up to three months.
While most cashback transactions work smoothly, with purchases successfully tracked by retailers and payments made on time, problems can occur at times. A recent survey by Consumer Intelligence found 41% of respondents complained about not being paid at some point. Users who don't receive payments should ask their site to intervene.
And some people will be disappointed to find that several popular retailers ? notably Amazon and John Lewis ? do not offer cashback on purchases made via Quidco and the rest.
On the technical front, Which? warns that cashback site users should keep a close eye on their "cookies" ? the software the sites use to track your visits. "To be paid your cashback, there must be a clear 'cookie trail' between your computer, the cashback website and the retailer," Which? says. "For example, if you regularly buy goods direct from an online sports shop and then decide to take advantage of cashback as well, via one of the sites, you'll need to clear your cookies first. This will wipe away all your earlier behaviour of only shopping direct and, instead, set up a new cookie trail between your computer and the online sports shop via the cashback site." If you don't do this, the absence of a trail could mean no cashback payments.
It is impossible to say which site offers the best value because each will have different deals with different retailers. Top Cashback beats Quidco on the fee front in giving members 100% of their cashback with no deductions for administration costs, and it offers a "highest cashback guarantee" where, if a member finds another site has negotiated a higher cashback rate with a retailer, it will refund the difference. It also offers sliding-scale loyalty bonuses to members.
Meanwhile, Quidco says it is unique in offering a new in-store cashback system where, if members register a payment card on their account and shop while out and about using that card to pay for goods and services at retail partners, cashback payments will automatically be credited to their account. These in-store cashback rates include, for example, 4.5% at Halfords and at Cineworld cinemas, and 2.25% at Dorothy Perkins.
This weekend's hot deals
Quidco
Aviva ? �70 cashback for any motor insurance policy bought, and if you buy another insurance policy in the same month you get �25 bonus cashback in addition to the cashback offered for the second policy (�55 cashback for home, �15 for travel)
O2 ? �80 cashback if you take out an 18 or 24-month mobile contract (all phones but the iPhone) plus an extra �10 if you buy an accessory.
Phones 4u ? �100 cashback for all iPhone 4 contracts
Santander ? �100 free when you switch your main current account to Santander plus �50 cashback
Top Cashback
RAC UK breakdown cover ? up to �60 cashback for new customers
e2save.com ? �100 cashback on all iPhone handset contracts
AllSaints Clothing ? 15% cashback on all purchases
Savile Row Company ? 16% cashback on all purchases
Equifax ? �16.50 cashback for taking a free 30-day credit report
Play.com ? 2.5% cashback on all games, books, DVDs and music
Source: http://www.guardian.co.uk/money/2011/jan/22/cashback-websites-cash-for-free
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