The complete guide to earning cashback

If you want to get the best price on everything, how you pay is every bit as important as shopping around for a good price. This cashback guide shows you how easy it is to get rewarded every time you pay for something.

No one likes finding out they've overpaid for something: it's why most savvy shoppers will take the time to shop around and compare deals before buying. 

But most of us miss a huge opportunity to save even more on that 'bargain find' by paying for it in the wrong way.

Confused? In this guide, we'll explain why you should be getting something back on every single purchase you make if you really want to make the most of your money.

It really couldn't be simpler, and there are absolutely loads of ways you can do so.

So let's take a look at the various ways you can earn cashback. Happy shopping!

Cashback websites like My Money Pocket, Quidco and Topcashback are a great way to earn a bit of extra cash when you shop online. And all it takes is a small change to your regular shopping habits.

If you know you want to shop online with a particular retailer, then rather than going directly to their website, instead you go to your chosen cashback website and search for that retailer.

If the cashback website works with that retailer, you can then follow a tracked link over to the retailer’s website.

So let’s say I want to spend with M&S. I head to a cashback website first and search for M&S, and then if there is a cashback deal on offer, I follow the link over to the M&S website.

This link is important as it tracks how much money I spend. The cashback website will then pay me a percentage of the money I spend in cashback.

So how does it work? Basically, the cashback website is paid a referral fee for sending the shopper to the retailer’s website, and then hands some or even all of that fee back to the shopper in cashback.

On the face of it, the sums you earn in cashback here are pretty small, perhaps a pound or so depending on how much you spent with the retailer.

But they can add up incredibly quickly, to the point that if you use a cashback website every time you shop online you can quickly bring in hundreds of pounds.

You can easily earn hundreds of pounds cashback when buying a new phone, switching broadband or booking a holiday.

Note that most cashback websites offer a free level of membership, while there may be a higher tier on offer that you’ll have to pay for.

These higher levels come with all sorts of benefits, from higher rates of cashback to faster payments and additional methods of customer service. 

An important thing to remember here is not to get distracted by the rates of cashback on offer.

There’s little point in shopping with a more expensive retailer, or paying more for a specific service simply because of a slightly higher rate if you end up worse off overall.

Take a look at our guide to the best cashback websites

Cashback credit cards are a great way to get something back every time you shop.

With these credit cards, you receive a percentage of the money you spend back in the form of cashback. This is paid irrespective of where you spend that money.

The rates of cashback on offer can vary depending on when you are shopping.

Some cards for example offer an increased rate of cashback when used in the first few months of card ownership, making them an excellent option if you have a big spend on the horizon.

Other cards offer a different rate of cashback based on how much you spend over the year. In other words, if you spend more than a certain threshold then you qualify for a beefier rate of cashback.

This highlights the best way to get the most out of cashback credit cards ‒ use them as much as you possibly can.

That means putting as much of your regular spending on the card as possible.

There are plenty of potential negatives to bear in mind though.

Firstly, some cashback cards are offered by providers whose cards aren’t accepted in all retailers.

This inevitably limits the amount that you can use the card, and therefore how much cashback you can earn overall.

Cashback cards also often come with an annual fee that you’ll need to pay, which can eat into the amount of cashback you earn.

While it’s crucial that you use the card as much as possible in order to maximise the cashback earned, it’s equally important that you don’t see this as an excuse to spend more than you normally would.

Cashback cards only work if you pay off the balance in full each month, as otherwise the interest charged on your outstanding debt will swiftly erode the cashback you earn.

Finally, bear in mind that cashback credit cards are often reserved for borrowers with the best credit records. So if you have a black mark or two in your history ‒ perhaps the odd late or missed payment ‒ then you may struggle to get your hands on one.

We’ve rounded up the best cashback credit cards available today.

There are all sorts of bank accounts that reward account holders with cashback, but the money offers can work in slightly different ways.

First and foremost there’s the very simple method of paying customers just for opening the account in the first place.

This is a sort of ‘golden hello’, where applicants are welcomed to the bank with a cash bonus usually of £100 or more.

There are generally certain criteria that you’ll need to meet in order to qualify for the deal though, like not having had an account with the bank in the last few years (making you truly a ‘new’ customer’), as well as paying a certain amount into the account on a monthly basis or setting up a specific number of direct debits to be paid out of the account each month.

What’s more, while the cashback is a welcome present, you will often have to wait a couple of months before you actually receive it.

Some bank accounts handle cashback in a slightly different way, paying you cashback on the direct debits you pay from the account.

With these accounts, you’ll pocket a percentage of the money that goes out on your regular bills, like your water bill, Council Tax or even mortgage.

There are a few things to bear in mind with these accounts.

Firstly, the amount of cashback you can earn from each bill may be capped, limiting the amount you can pocket overall.

What's more, these accounts often come with a monthly fee that you’ll have to pay in order to hold the account, which in itself will then limit how much cash you bring in through the cashback.

Finally, there are some bank accounts that reward account holders with cashback when they spend using their debit card with specific retailers.

The rates on offer can vary sharply between different retailers, but this can be a welcome little earner if the cashback is offered on shops you tend to spend with regularly.

Check out our latest run-through of the top current accounts for cashback.

Reward credit cards work a little differently from cashback credit cards.

As with a cashback card, you get something back every time you spend with the card, however rather than bringing in cold, hard cash you’ll instead get another form of reward.

This might be in the form of loyalty points that you can then use to save money on some other form of spending.

For example, some cards allow you to earn Nectar points on your spending, which you can then use to cut the cost of your groceries at Sainsbury’s or when shopping with another Nectar-scheme partner.

Other reward schemes provide you with a form of Airmiles based on your spending, which you can cash in on flights, hotels and other travel expenses.

While the rewards are slightly different from cashback credit cards, the fundamentals are the same.

It’s important that you use the card for as much of your usual spending as possible, without getting carried away and spending more than you can afford, while you also need to pay the balance off in full each month.

As with cashback cards, some reward cards charge an annual fee too which you’ll need to include in your calculations to see just how rewarding they can be for you.

We've highlighted the top rewards credit cards here.

Loyalty schemes in their own right are also a very important thing to take advantage of wherever possible, as they leave you better off in much the same way as a straightforward cashback deal.

There is no shortage of loyalty schemes to choose from. Most of the big supermarkets have their own scheme for example, while there are also loyalty schemes run by the big petrol forecourts like BP and Shell.

Membership of these schemes is usually free, but you then earn reward points based on how often you spend with that particular retailer.

Those points can then be cashed in to save you money on future spending.

These are particularly worth considering for retailers that you regularly use.

For example, if you always do your food shopping at Tesco then it’s a good idea to make the most of the Clubcard scheme, as you’ll earn more points and can then cash them in for rewards both in-store or with partner retailers.

Take a look at our guide to the top supermarket loyalty schemes, and the fuel schemes worth considering.

Donating to charity is always a worthwhile thing to do, but being smart about it means you can do so without actually having to pay anything yourself.

For example, some retail websites have their own charitable schemes, where the money you spend is tracked and the retailer then donates a portion of the money you have spent to worthwhile causes.

So in effect, you get both the items you wanted to buy, and donate to charity, without spending a penny more.

There are also charitable cashback websites, which work in exactly the same way as the traditional cashback websites we’ve highlighted above.

The only difference is that rather than the cashback being paid to you, it instead goes to your preferred charities. 

We’ve highlighted some of the top options when it comes to easy, free charitable giving.

Hopefully, this guide has shown how easy it is to get something back every time you spend. 

But if you really want to give your finances a massive boost you need to stack your cashback wherever possible.

For example, once you've found a cracking deal on a cashback website, make sure you pay for it with a cashback credit card or bank account. Now you're earning cashback on your cashback!