What is cashback and how does it work?
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Key takeaways
Cashback rewards give people back a percentage of whatever they spend
You can get cashback through apps like HyperJar, credit cards, debit cards, store cards and specialist cashback websites
The HyperJar app gives spenders up to 20% instant cashback on digital gift cards with their favourite shops
What is cashback?
Cashback is like getting a little ‘thank you’ from your favourite stores every time you shop. Imagine receiving a slice of your spending back just for buying what you want —sounds great, right? Whether it's through cashback gift cards and rewards available from apps like HyperJar, store loyalty programmes or websites, it’s a way to save as you spend.
How does cashback work?
Cashback rewards can land directly in your account, which is how HyperJar works, or accumulate as points or credit for a future cash-out. Some cash rewards are instant, like an immediate high-five, while others build up until you hit a certain amount or date. The rates can change, depending on what you buy, or stay steady across all your shopping adventures. Whether you're spending online or in-store, cashback makes every purchase that bit more rewarding.To start benefiting from cashback, you’ll need to pick the kind of cashback you want.
How do prepaid cashback apps like HyperJar work?
HyperJar is one of the very few apps to offer special cashback gift cards - called Cashback Vouchers in the HyperJar app. When you buy a Cashback Voucher with a brand, you’ll typically be offered a different rate depending on whether you’re happy to commit to spend the cashback with that brand in future (this is usually the best rate), or if you want your cashback available to spend anywhere. If you buy a £100 Cashback Voucher with H&M, for example, you’ll currently get 7.5%/ £7.50 straight into your HyperJar account to spend with H&M in future, or 5.5%/£5.50 that you can spend anywhere. The Cashback Vouchers are stored in the HyperJar app until you’re ready to use them, so you don’t need to scrabble in kitchen drawers to find them.
There is another kind of cashback available from HyperJar, via their Shops tab. When you spend with brands including Lego, Whistles, Morrisons, Honest Burgers and lots more using your HyperJar card you’ll get up to 10% cashback to spend with them next time. Just for paying with your card.
How do cashback debit cards work?
Some accounts offer what’s often called ‘everyday cashback’ when you spend using the account debit card. There’s usually a flat cashback rate which will apply to all spending, or to certain categories such as energy and groceries. The cashback will typically be added between 30-60 days following the end of the month in which you spent.
Instead of cashback, these accounts might also offer points based on spending which accumulate and can then be converted into money off things like flights or cinema visits.
How do cashback credit cards work?
Some credit cards offer cashback on spending, usually capped to a certain amount each month. They may also charge a monthly or annual fee, so do the maths before you pay out anything to work out whether you’ll still be a net gainer after any fees.
Before you apply for a credit card, it’s a good idea to check how likely you are to be accepted on an ‘eligibility checker’ as being refused can negatively affect your credit score.
How does a cashback store card work?
Some shops offer their own rewards cards that will give you cashback when you spend with them, usually operated via an app, and based on reaching spending targets. You’ll get other benefits too, such as free or discounted products.
How do cashback websites work?
Typically, you will register with a cashback website and then visit their website to find the retailer you want to shop with. Click on the URL through their site and you’ll earn cashback when you shop. You might not receive the cashback immediately and could have to accumulate a specific amount before you can ‘cash out’.
What other benefits does HyperJar offer?
Not just cashback and rewards
HyperJar helps people manage their money, as well as spend it. On top of great cashback and rewards, HyperJar’s visual money management system lets you organise money according to where you want it to go - whether that’s on groceries or to save up for a holiday.Talking of holidays, HyperJar doesn’t add any charges when you use the spending card abroad, making it one of the best ways to pay when you’re travelling. That applies to kids’ cards, too, which parents can add to their HyperJar account with no monthly fees.
Download the Hyperjar app today
What are the benefits of using a cashback card?
Earning money back on your purchases
For each purchase a cardholder makes, cashback cards give users a percentage of the value of their purchase back. So, cashback cards can be a money-saving hack that makes your money go further and gives you more money to play with.
Finding your favourite brands for less
Branded items can be expensive, but if you want to treat yourself you can make them more affordable by finding a way to earn cashback on what you buy. HyperJar offers cashback for a variety of popular brands and stores including Adidas, Xbox and Selfridges.
Enjoying additional discounts
Some cashback platforms offer additional discounts or coupons on certain products or services, which can increase the overall discount for you. HyperJar has negotiated several discounts at restaurants and shops that can be viewed in the Shops tab of the app.
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How to choose the right cashback card
1. Evaluate your spending habits
Before diving into the world of different cashback options, take a step back and assess your spending habits. Some account cards only offer cashback on spend in certain budget categories, like gas and electricity, so make sure you’re spending enough in these areas to benefit. Remember, the key is to maximise cashback without altering your spending behaviour.
Also, be honest about how you deal with debt and repayments. Having a credit card means you’ll need to have a level of willpower to pay off the card each month. If you don’t have that, you might want to explore other ways of getting cashback that don’t involve the risk of debt, such as by using HyperJar or cashback websites.
2. Choose a cashback card with reward categories that match your spending
Once you’ve evaluated your spending habits you will be more aware of what bonuses would be most useful to you. For example, if you dine out frequently, a card with a higher rate on restaurants and pubs would be beneficial. Or, if you spend a lot on groceries, you might choose a card that offers 5% cashback at the supermarket. And if you love to travel, you might be interested in a card that can be used to save for aeroplane tickets and travel perks.
Remember that if you feel like you might be tempted to overspend with a credit card, it might be less stressful for you to get cashback through the HyperJar app, which offers up to 20% cashback on your favourite brands.
3. Compare cashback credit card fees
When comparing annual fees and other fees on cashback cards, it’s important to consider the overall value you’re getting from the card. Some cards may have high annual fees but offer generous cashback rewards or other benefits that can offset the cost. Other cards will have lower annual fees but may also have lower cashback rewards or more restrictive terms.
The best way to compare cashback credit cards is to look at the total cost of ownership, which includes the annual fee, interest charges, and any other fees.
HyperJar has no annual fees, and you get access to their Cashback Vouchers - think digital gift cards that you buy for yourself - which offer some terrific cashback rates.
Cashback FAQs
Are there any downsides to cashback?
Let’s talk about cashback credit cards first. With the promise of earning cashback on your spending, cashback credit cards might encourage people to spend more than they otherwise would. This is especially true for cards that have a minimum spending amount to earn any money back on your purchases.
If you can trust yourself to pay off your cashback credit card balance in full each month and not overspend by chasing cashback targets, you might reap the rewards of a cashback credit card. If not, you could end up getting into debt.
The beauty of an app like HyperJar is that you can’t get into debt, because it’s a prepaid account.
Is cashback worth it?
Cashback reward schemes pay cardholders a percentage of their purchase back each time they spend and can be an excellent way to make extra cash back on your purchases… in some cases.
If you can trust yourself to pay off your cashback credit card balance in full each month and not overspend in pursuit of cashback, you might reap the rewards of a cashback credit card. If not, you’ll probably end up racking up more debt than the cashback card is worth. But there is a way to get cashback and avoid debt, and it’s as simple as downloading the HyperJar app and registering for your free HyperJar cashback card. There are no annual fees to cancel out your cashback and you can earn up to a generous 20% on most of your high street spending, plus get extra rewards.
How do I redeem cashback with HyperJar?
HyperJar gives you access to a huge range of cashback and discounts from pretty much every big-name retailer you can think of. You’ll find these on the Cashback and Shops tabs of the HyperJar app, where you can choose the brand and deal that suits.
There are a few different ways to redeem cashback in the HyperJar app. When you buy a Cashback Voucher - think digital gift cards that come with a bonus - the cashback will land in your account instantly. Depending on what option you’ve chosen, this will either be cashback you can spend anywhere, or cashback you can only spend with the Cashback Voucher brand.
Other deals in cashback are linked to paying with your HyperJar card: you’ll get a percentage back of anything you spend with brands like Honest Burger and Morrisons which you can redeem the next time you shop there.
About the author
Mathew Megens is the co-founder of HyperJar. He worked in fixed income for both Lehman Brothers and Morgan Stanley, where the idea for HyperJar was inspired. He then worked for IFC, part of The World Bank, helping to setup up financing products in developing nations around the world before finally starting the spending super-app HyperJar. With HyperJar users are able to share jars to spend together and plan for big spending occasions as well as use cashback to make their money go further.
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