...using cashback can give you big savings.
From The Sunday Times
March 18, 2007
Savvy online shoppers could save up to 30 per cent by using a combination of search sites, cashback sites and moneyback credit cards.
Cashback sites are a relatively new phenomenon. They reward their users by refunding a percentage of what they spend at affiliated “etailers”. The size of the cashback usually varies between 1 per cent to 10 per cent.
Well-known retailers including John Lewis, Marks & Spencer and Tesco have joined up with cashback sites such as Greasypalm, Quidco, Rpoints and Mrscashback to offer the savings.
Once logged on to the sites, you click on the links to retailers and start shopping. Mrscashback, for example, pays up to 3% on goods from Tesco or 5 per cent from John Lewis.
Others such as Quidco offer special cashback deals. Customers buying a mobile phone contract from 3 can receive £100 cashback with Quidco.
One of the largest sites is greasypalm.co.uk. It says its 400,000 members have been credited with more than £4m in cashback since it launched in 2002. It has deals with 650 online retailers, including Dixons, the AA and Carphone Warehouse.
You even get a £2.50 reward for joining and £7 for recommending a friend. This is added as credit to your account and the money is paid once you accumulate more than £25.
Once you have used a cashback site, you should pay for the goods with a moneyback credit card to make even bigger savings. One of the best moneyback cards is American Express Platinum, though you need to be earning at least £20,000 a year. You get up to 3 per cent cashback on all card purchases in the first three months.
After this, the rates are tiered so you get more for higher spending. You earn cashback of 0.5 per cent if you spend up to £3,500, then 1 per cent on £10,000. If you spend more than £10,000 in a year, you earn 1.5 per cent.
Some of the biggest savings are on financial products. Suppose you used a comparison site such as Moneysupermarket to search for buildings and contents insurance for a four-bedroom terraced London home worth £400,000, with contents cover of £11,000 and a £150 excess. Lloyds TSB would come out as one of the cheapest at £333.55.
You could save £120 using cashback site Quidco, reducing the annual premium to £213.55. And a further 3 per cent can be knocked off if you use your Amex Platinum card — a saving of £6.40 So the cost of the insurance would be £207.15, a saving of 37 per cent.
The trick also works for electrical goods. A Sharp 46-inch LCD televi-sion costs £1,995 on the John Lewis site. However, a search on comparison site Kelkoo reveals you could get it for £1,468 from Empire Direct. Using Greasypalms, you could then get an extra £15 off, while your Amex card would save you about £43 — a total saving of £585, or 29 per cent.
The cashback from the sites is generally sent as a cheque, but you usually need to accrue more than £20 of savings before one is issued. There may also be administration or subscription fees involved.
Mrs cashback pays when users have accumulated more than £30, but it levies a £3 admin fee. It also has a £29.95 annual charge. Quidco, calling itself a “cashback cooperative”, pays all proceeds to customers but withholds £5 a year as a subscription.
The cashback can often take weeks to be credited to users’ accounts because the retailers need to be sure that the goods are not being returned.
Rpoints has a “highest cashback guarantee” which will pay you the difference if you find a cheaper cashback offer elsewhere. You have to make the purchase using the site first, and then claim the difference afterwards.
However, don’t buy a financial product just because of the discount.
Always use search sites first, then look for a tie-up with a cashback website.
Some best-buy products have cashback offers. Budget car insurance can be bought with a £12.50 cashback deal from Greasypalm; AA home cover offers £17.50 cashback. The American Express Platinum card has a £10 cashback offer from Quidco, while an Egg card comes with £15.50 cashback.
Jason Lloyd of Moneysupermarket said: “Using cashback sites should always be step two, after you have found the cheapest and most appropriate deal. After establishing this, you can use the sites to make extra savings if the company is featured.”
To find the cheapest televisions and cameras, use online shopping “robots” such as pricerunner.co.uk and kelkoo. com. The sites, also known as shop-bots, scan the internet to find the best price. Then find a cashback site.
A Pricerunner search shows that an Xbox 360 costs £199.99 at Currys. Using Quidco, you can save 3 per cent or £5.99, so your overall cost will be £194. By using a cashback card such as the American Express Platinum, you will save an additional £5.99, so you can buy the console for £188 — £11 less than the standard price.
However, you should bear in mind that unless you make further purchases during the year, these savings will be reduced by the £5 subscription fee Quidco charges. It is always worth calculating if the cashback offsets any of these additional fees.
Lloyd said: “Cashback sites are increasing in popularity and can give consumers cost savings across a variety of goods and services. They do deliver better value for money than straight loyalty schemes but the catch is you have to register and keep using the same site to get those savings.”
Cashback sites don’t always work. Using Kelkoo, a Nikon D80 camera can be bought for £539.98 from bestcameras.co.uk. However, the website is not featured at Greasypalm.
The same product costs £741.84 from PC World, which is on the Greasypalm site. It comes with a 1.5 per cent discount but this saves only £11.13, so it is more expensive than going for the cheapest online retailer. THE WAY IT WORKS
- Use a comparsion site to find the best online retailer. Kelkoo.com and pricerunner.com are good for electrial goods, or try moneysupermarket.com for financial products.
- For example, buildings and contents insurance for a four-bedroom terraced London home worth £400,000, with contents cover of £11,000 and a £150 excess, would cost £333.55 with Lloyds TSB.
- You could save £120 at cashback site Quidco, cutting the premium to £213.55. If you use an Amex Platinum card with its introductory 3 per cent cashback offer you will save a further £6.40.
- So the cost of the insurance would be £207.15, a saving of 37 per cent. http://www.timesonline.co.uk/tol/money/consumer_affairs/article1511462.ece