An advertisement we’ve probably all seen before, and that’s cashback. Cashback is definitely the most used and recognisable promotional mechanism we have in society. It can benefit both the customer and the business offering it and is something to consider when getting your first credit card.
Cashback comes in many different variations, and this could be a credit card, mobile application, or web extension. Each works in a similar way but offers various promotional benefits. For example, a mobile app or web plugin will be targeted towards online purchases. In comparison, a cashback credit card will typically be aimed in the direction of high street shops and supermarkets.
In this article, we will discuss:
- How cashback works
- Key considerations
- How to choose the right offer
- How to claim cashback
- How long it can take to show up in your account
How Does Cashback Work?
But how do cashback promotions work? It’s a simple yet powerful concept. If you were to use any of the cashback variations mentioned above, they’d usually work on a percentage basis. For instance, 1% off every purchase you make while using these cashback methods. So, for every £100 you purchase through a cashback promotion, you’ll receive £1 back.
Cashback promotions can massively vary in discount, the stores you can use them in, and the thresholds you have to receive to reap their benefits. The more you spend on your credit card, mobile app, or web extension, the more you’ll earn. So, each time you use a cashback deal, you’ll receive back a specific percentage of the purchase price, depending on your provider.
However, each cashback method will work slightly differently. For web extensions and mobile apps, you’ll typically receive funds after you’ve met a certain threshold to make the transaction. For cashback cards, it’ll be used to reduce an outstanding balance that’ll decrease the owing on the card, or it’ll show up as available funds to spend.
The cashback websites and mobile apps are pretty self-explanatory, but the credit cards are slightly more complicated. For some cashback credit cards, you’ll typically pay back the bank either on a monthly or yearly basis, depending on your issuer. If payments are not met on time, you’ll receive high-interest rates, and it’ll negatively affect your credit score.
Key Considerations For Cashback Offers
Something to note, not all cashback credit cards are built the same. Here’s why:
1. Rates can vary
Depending on your provider, the rate of cashback you can earn will fluctuate massively. Some credit cards will offer different percentages of cashback depending on where you’re shopping. For example, you may receive 1% back from supermarkets and 2% from petrol stations.
2. Shop usages can differ
Some cashback promotions won’t be allowed in certain shops. If you’re opting-in for a credit card that issues cashback, make sure the shops you visit regularly allow for this type of discount.
3. Different percentage thresholds
The more you spend, the more you earn. Credit cards usually have a threshold incentive with them. For instance, if you spend £5,000 a year with your cashback credit card, you’ll receive 1% cashback. For any purchases over this threshold, you’ll receive 2% and so on.
How to Choose the Right Cashback Credit Card
Now you understand that credit cards offer the most amount of versatility and discount throughout your daily life, it can seem unquestionable to get one.
However, when picking the right cashback credit card, it’s beneficial to read the fine print. Like most credit card deals, they offer introductory offers to get customers on board. With cashback cards, they’ll typically offer you more cashback for the first year and then dramatically reduce it in the second.
Before signing up, find out the below:
- Introductory rates (interest, cashback, etc.)
- Rewards and benefits (shops you can receive cashback and threshold deals)
- The interest rate and APR after your introductory period
- Minimum repayments
- Annual Fee
After gathering the above, you’ll be able to make an accurate decision of which card suits you best. Remember to opt-in for a card that offers the most value from cashback based on your daily lifestyle. For example, if you shop in a specific supermarket, it’ll be best to select a cashback credit card that definitely provides this discount in your chosen store.
How To Claim Cashback
Above we’ve mentioned three cashback methods, credit cards, mobile applications, and browser plugins, but how do you claim cashback from them? In previous years, many people have thought cashback is a real hassle and not worth it. However, as time progresses, it’s becoming more convenient for the end-user.
Claiming From A Credit Card
Claiming cashback from a credit card is the simplest. It’s an automatic process, and each time you purchase goods or a service from a specific vendor, it’ll either make the funds available over a set amount of time or take it away from the final credit card balance.
Claiming From A Mobile App
Most mobile apps are relatively easy to use, and typically they’ll require you to meet a certain threshold to receive funds. For instance, their minimum transaction fee may be £50 or something similar. Once this requirement is met, they’ll transfer the funds to either an online payment gateway or directly into your bank account.
Claiming From A Browser Plugin
If you prefer optimal convenience, you’ve probably signed up for a browser plugin that gives you various cashback deals on specific vendors. Again, similar to receiving funds from a mobile application. With a browser plugin, you’ll have to meet particular threshold requirements to receive the funds to an online payment method or bank account.
How Long Does Cashback Take to Show Up?
The time it takes to receive cashback can vary on your method. For credit cards, the provider will generally offer you two options before signing up. These are annual or monthly payments. Depending on which deal you sign up for, you’ll receive cashback on either a monthly or yearly basis.
With mobile or browser extensions, once you’ve requested funds, they’ll use standard wire methods, so you should receive funds no later than 7-10 days. But again, this widely depends on your applications.
Hopefully this article has given you an understanding of what cashback is, how it works, the key considerations and how you can claim it. If not, feel free to contact us here!
James Banerjee is an Account Director who graduated from the University of Kent in 2014. He works in SEO on clients such as HSBC UK and Nestle and he has a keen interest in personal finances and money-saving advice.