how cash back works
an outgrowth of credit card issuers general rewards programs cash back programs date to 1986 when the discover card was launched nationally introducing the concept since then they have become ubiquitous and nearly every major card issuer now offers the feature on at least one of its products it s an incentive for existing customers to use the card early and often and for acquiring new clients or poaching them from a competitor unlike traditional rewards points which can only be used to buy goods or services or gift cards offered by the card issuer cash back rewards are what their name implies cash they are usually presented to the cardholder on the monthly credit card statement consumers may receive the cash back reward through direct deposit to a linked bank account as a statement credit reducing that month s bill as a gift card or through the mail by check 1the year of the national debut of the discover card which pioneered cash back rewardscash back amountsthe amount of a cash back reward can range from 1 to 5 of a transaction 2 some transactions also offer extra rewards through merchant partnerships purchases at that merchant earn you more than purchases elsewhere 3credit cards often offer varying cash back levels depending on the type of purchase or transaction level for example a cardholder might earn 3 back on gas purchases 2 on groceries and 1 on all other purchases a special promotion where you can get cash back often might be in effect for three months during which spending in a specific category restaurants or department stores earns a higher refunded percentage for that period 1typically the cardholder must reach a particular transaction level to qualify for cash back or other benefits it s usually small around 25 but it varies from card to card some card companies also let cash rewards be used toward specific purchases including travel electronics or partnership incentive programs 1 in issuing a cash back reward the credit card company shares with the consumer a portion of the transaction fee that it charges merchants there is an actual retail event called cash back day which debuted in 2019 and continues annually each november in 2020 retailmenot gave its customers up to 20 cash back if they enrolled in its programs and shopped at 100 featured stores with 1 153 available offers 4cash back sites and appscash back apps and websites can also help you earn money for shopping while using their tools many cash back sites partner with retailers such as amazon and target to offer specific deals on items such as toys or holiday gear cash back sites usually operate like this first you download the app or extension and sign up for a free membership next you sign into the cash back site use a link for the store that you want to shop in and start shopping 5the cash back site or app records your purchases and you earn money after your transactions are approved and go through the cash back a percentage of your spending usually lands in a paypal or bank account cash back apps can be used to find money saving deals while earning cash in different categories including restaurants and delivery services three popular cash back programs are rakuten ibotta and shopkick although there are others 5this cash back website was ebates in another life rebranded as rakuten in 2019 the site earns its money by getting commissions from more than 2 500 stores including lowe s kohl s walmart and macy s for sending online bargain hunters its way the commissions are shared with rakuten customers which is how you earn your cash back up to 40 if you have a paypal account then your earnings can go there or the company mails you a check 6rakuten has mixed reviews on the better business bureau bbb website which gave it a b rating due to product and service issues including customers saying they never received their cash back rewards still the customer rating average is 4 25 out of five stars based on 330 customer reviews 7this cash back app can be used in stores and for online shopping via your mobile device its specialty is groceries the app is enabled in hundreds of markets and large chain stores such as trader joe s whole foods wegmans costco hannaford walmart target aldi and albertsons plus convenience stores such as 7 eleven wawa and stewart s shops lbotta is in partnership with more than 1 500 retailers and brands in categories that include health and wellness travel home and auto kids and baby pet supply sports and outdoors 89it also offers cash back on subscriptions restaurants and food delivery services ibotta doesn t list the percentage back that you ll earn by using the app still according to its website lbotta has paid out over 980 million to more than 35 million users since 2012 when it was founded and the company states that the redemption will show up in your account within 24 hours or less 810like rakuten ibotta earned a b rating from the bbb and there are compliments and complaints from users some of whom claim they haven t received their cash back on time while others say they are earning money quickly three hundred and thirty two customer reviews average out to a 2 55 customer rating out of five stars 11this mobile app lets shoppers earn gift cards in place of cash so while it is not exactly a cash back tool users can earn reward points which the company calls kicks for using the shopkick app and scanning products in participating retailers you then turn those points into gift cards for such varied companies as starbucks amazon target sephora best buy barnes noble paypal apple amc and more 12