Cashback in simple words from A to Z: for beginners
As it is not regrettable, but we live in an era of consumption. There are so many shopping centers around, colorful boutiques and attractive salons that beckon us to go into them and buy something. And there is nothing to say about electronic devices. New and useful devices are coming out at breakneck speed. So I want to own them.
Every trip to the store makes us think about the money that we leave here. After all, prices are constantly rising and our spending, even planned ones, is increasing. If only we could find a tool that would help us to make the necessary and planned purchases with pleasure, while not worrying too much about increased prices and expenses.
Imagine that you have a magical device that allows you to simultaneously make / pay for purchases and at the same time earn money. The article will discuss what cashback is in simple terms and how to use it to the benefit of the family budget.
The other side of spending
The article will discuss programs and methods that allow you to earn real money on purchases. Provided that these purchases are planned. And we will earn on cashback.
Translated from English, cashback (cash back) means a refund. The meaning of cashback is that the buyer gets back part of the money spent on the purchase. This encourages them to spend even more.
Cashback is a type of loyalty program to attract and retain customers in business. These programs owe their greatest popularity to the financial sector, which widely promotes them.
Is there a difference between cashback and regular discounts? And is the game worth the candle? Let’s figure it out.
What is cashback in simple words and how to use it
In standard discount programs, the discount is provided to the buyer by reducing the seller’s profit. That is, by reducing the cost, the seller seeks to attract more buyers, thereby increasing sales.
Unlike discounts, cashback is paid to the buyer by a third party, and not by the seller of the goods. This third party is called an affiliate. Its main task is to ensure the influx of buyers into the business.
Where is the cabshek
Currently, loyalty or cashback programs are already being used not only in the financial sector, but also in retail and online stores, pharmaceuticals and many other areas.
All cashback programs are similar in that they return a certain percentage of the purchase, but there are some nuances. Consider the most common programs.
Already, probably, there is not a single bank left that would not offer its customers bank cards with a cashback program. These programs can be divided into two types. In some, cashback is paid in the form of real money, while in others, points, bonuses or other conventional units are awarded, which, in most cases, can be converted into rubles.
Cashback programs exist for both debit and credit cards. The standard cashback for purchases with bank cards is 1%. But banks can pay more. There are banks that return up to 15% cashback for certain categories of expenses.
There are separate categories for purchases in pharmacies, shops, beauty salons, restaurants and others. The division of purchases into categories is based on the MCC code of the purchase.
Each bank sets its own rules and conditions for accruing increased cashback. For example, some banks impose restrictions on the minimum amount of personal funds on a card or account. Others do not charge increased cashback if there were no expenses in the usual categories. Therefore, you need to carefully study the rules of the program.
Banks mainly use two approaches to assigning categories with increased cashback:
– persistent categories: with this approach, the categories of increased cashback do not change over time. The bank client has the opportunity to select one or more categories to receive an increased cashback. It all depends on the conditions of a particular bank. However, the user can change the category of increased cashback once a month. It will start operating next month.
– category variables: with this approach, the categories of increased cashback change over time, usually every quarter. That is, at the beginning of the quarter, the bank’s client will need to choose which categories of the proposed ones he will receive an increased cashback. In the next quarter, the selection procedure will be repeated anew.
We choose what is more profitable
In addition, banks offer increased cashback, which can reach 15%, and 20% or even more, when making purchases from bank partners. And these are grocery stores, and stores of household goods and electronics, and organizations of the service sector, hairdressers and others did not go unnoticed.
Benefits of the programs:
- Free card maintenance under certain conditions depends on the bank;
- Cashback is paid out in real money on debit cards at most banks;
- Increased profitability of cashback on credit cards through the use of savings accounts and deposits. For more information on recommendations for using credit cards, read the article (link will open in a new window);
- You can pay for purchases with a card in almost any store;
- Can be used in conjunction with other cashback programs.
- Credit cards mainly accrue virtual units that can be converted into rubles under certain conditions;
- Owning a credit card negatively affects the credit rating, as a result, they may be denied a loan when it is required;
- The risk of increased costs due to late repayment of credit card debt;
- The limit on the monthly amount of cashback that can be received depends on the bank.
Sellers of goods and services
Trade enterprises also do not stand aside from the implementation of their own programs to attract and retain customers. More and more retailers and online stores are introducing their own cashback programs.
Unlike the programs of the financial sector, in these cashback programs for the purchases made, the seller charges the buyer virtual accounting units (points, bonuses, and so on and so forth).
These units of account can be used to pay for the following purchases from the seller who accrued them. For example, one well-known sporting goods retail chain gives its customers points that can be used to pay up to 30% of future purchases.
In most cases, these credits have an expiration date and can only be used to pay for a part of a future purchase, and only in this store.
Benefits of the programs:
- Substantial discounts may be available on goods and services for program members only;
- Payment by any bank cards;
- Closed sales and promotions.
- Remuneration is charged in virtual units;
- Cashback cannot be withdrawn;
- You can pay for goods or services with points only in the stores of the program organizer;
- Limited lifetime points;
- Partial payment for purchases with points.
Online cashback services
In addition to banking cashback programs, there are specialized cashback services that pay rewards for purchases from their partners. Sellers of goods and services pay commissions to these cashback services for each attracted buyer.
Refunds for online purchases
Services, in turn, share the received commissions with buyers. Thus, they stimulate the latter to buy goods and services through their service.
Unlike the cashback program for purchases from bank partners in online services, payment can be made in various ways. These are bank cards, and cash to the courier, and electronic wallets, and other methods. At the same time, in order to receive a reward for purchases from bank partners, you need to pay only with a card of a particular bank.
These services have become most widespread with the development of the Internet and are used mainly for online shopping. However, there are services that allow you to receive cashback for offline purchases. True, mainly for promotional goods, and not for all purchases.
As mentioned earlier, these services are mainly intended for online shopping. Therefore, if you rarely make online purchases, it will take more time to accumulate enough money to withdraw money. Since many services limit the minimum amount for withdrawal, for example, 500 🪙 or even more.
Benefits of the programs:
- The ability to buy in a large number of online stores;
- Cashback with real money;
- Withdrawal of remuneration to a bank card;
- Discounts and promotions for service members.
- Standard cashback 5-10% of the purchase;
- Limitations on the minimum amount for withdrawal are possible;
- Mainly intended for online shopping;
- Fraud is not uncommon.
"Where’s the money, Zin"
Before continuing the story about how to make the most money on cashback, you need to remember the following point. In most cashback programs, rewards are accrued even from purchases at special prices and promotions. This makes shopping even more profitable.
There are a lot of cashback programs, so how do you understand which tool or combination of tools is right for you? This question is easy to answer, provided that you keep a family or personal budget.
In the case of budgeting, you have an accurate idea of your categories of expenses and their amount. For more information about maintaining a family budget, read the article (link will open in a new window). Now all you have left is to choose a cashback program for each category.
For example, you have the following categories of expenses in your budget: lunch at work, groceries, housing and communal services, car fuel, cellular communications, and so on. Now, for each category, specify which cashback program you will use. Below is a fragment of the card selection table with cashback.
As can be seen from the table, for the category of buying medicines, it is proposed to use an MTS credit card, which will accrue a 5% cashback for purchases in pharmacies. Plus, when shopping at pharmacies, we will additionally use the loyalty program of the pharmacy itself. This will further save on purchases.
It’s all about the details
When developing a usage strategy, you need to thoroughly work out and think through all the nuances. So, for example, the use of bank cards with variable categories of increased cashback is less effective. Especially when you are planning and managing a personal or family budget.
Moreover, the use of these cards is not advisable, as it will not allow you to plan your income from cashback programs for a long period, or it will significantly complicate the planning process. And this can lead to the fact that the income from cashback can fall significantly.
For example, this quarter, the bank charges an increased cashback of 5% for purchases in supermarkets. For a month, you have 20,000 🪙 for this expense item. Thus, in a month you can get 1’000 🪙. A very good increase in income, especially since you get it for spending money))).
The next quarter, the bank is changing the category to purchases in flower shops, and you don’t have this article at all. Even birthdays are not in this quarter. You are now forced to use the usual 1% cashback. That is, now you will receive 200 🪙 for shopping in supermarkets. Plus, you have the task of looking for a new card with an increased cashback for purchases in grocery stores in order to restore profitability.
Additionally, you will need to decide what to do with the current bank card. After all, it is not advisable to use it this quarter, and you cannot say with certainty that it will come in handy for the next quarter. But what if the annual maintenance of this card depends on spending on it? Then you will have to pay for it. That is, it will become a liability.
Looking for cashback
The development of a strategy for using the cashback program and their combinations is purely individual. After all, it depends on your budget and preferences.
To get the maximum benefit from the use of cashback programs, they need to be combined. That is, apply several programs at the same time to make one purchase.
To draw up a plan for earning on cashback programs, we suggest using the tools below. Of course, other programs can also be used. Let your financial imagination run wild.
Drawing up a strategy
- Cashback on credit cards. The main source of income. Because it allows you to use other people’s money to pay your expenses. Get rewarded for this in the form of cashback. They also allow you to increase the profitability of earnings by keeping your own funds in bank accounts. But the use of credit cards requires high financial discipline for control and timely return of funds. Otherwise, all the benefits from them will come to naught.
- Cashback on debit cards. A reserve tool for those categories of expenses for which, for some reason, it is not possible to use credit cards.
- Online cashback services. These services will be used for online shopping. Payment will be made by debit or credit card with cashback.
- Own cashback loyalty programs for sellers of goods and services. In those stores where we most often make purchases, we will use their loyalty program. For example, grocery stores, clothing and sporting goods stores and many others. We will pay, of course, with bank cards with cashback.
As mentioned earlier, banks offer different percentages of cashback for different spending categories. Therefore, it is advisable to use several cards for different items of expenditure of the family or personal budget. In addition to financial benefits, it will also have a positive effect on memory. After all, you need to remember which card is intended for what expenses.
So, when drawing up a plan for earning money on cashback programs, you need to strive to maximize income from these programs. To do this, when making a purchase, you should be guided by the following recommendations:
- If possible, place orders through the online cashback service.
- When shopping offline, use sellers’ cashback programs.
- Payment for goods or services must be made by credit or debit card with cashback.
For example, you have gathered with the whole family, consisting of 3 people, to go to the cinema. Each ticket costs 300 🪙. In total, you will pay 900 🪙. We will use the online service to order tickets. For example, MTS cashback, which offers 20% cashback for buying tickets. We will pay for tickets using a credit card with cashback. It is desirable that the card has an increased cashback category "Entertainment", which offers a 5% return in most banks. Thus, we can get back 25% of the amount spent. The only point is that cashback from MTS can only be spent on paying for cellular communications or shopping in MTS stores.
As a result, due to the simultaneous use of different cashback programs, it turns out to increase income, in some cases even double it. You also need to keep in mind that when using credit cards, the income from purchases will be higher due to keeping your own funds in a savings account or bank deposit.
Additionally, online services provide the opportunity to register as a partner in them. In this status, in addition to receiving rewards for your own purchases, you can get rewards for attracting new users to the service. As well as a separate bonus for purchases made by these users.
Choosing a profitable cashback program
When choosing cashback programs, we recommend that you carefully read and understand the rules of the program and pay close attention to the following:
- Return amount. It is usually indicated as a percentage. True, there are programs in which the return is calculated in accordance with the proportion. For example, 1 point is awarded for every 50 🪙 purchases. Knowing this value will help in planning your income for accounting in your personal and family budget. For example, your expenses for visiting cinemas is 5000 🪙 per month. Paying for the purchase of tickets with a card with a cashback in the "Entertainment" category in the amount of 5%, you can return 250 🪙.
- Cashback period. In some cases, accrual occurs within 1-3 days after the purchase. In others – at the end of the month. This gives an understanding of when you can receive the money.
- In what units is the remuneration calculated? In some programs, accruals occur in real money, which can be used immediately. In other programs, enrollment occurs in points or other virtual units. In the future, they can be converted into real money, in most cases.
Analysis of program indicators
- The maximum amount of cashback. Many organizers of cashback programs impose a limit on the maximum total amount of remuneration during the month. Thus, it is possible to calculate the maximum amount of monthly spending for a particular program. For example, using a bank card with a 5% cashback in the “Entertainment" category, you can return 1000 🪙 in a maximum of a month. Then it is not advisable to spend more than 20,000 🪙 per month for this category of expenses.
- Cashback withdrawal or conversion rules. In some programs, you can withdraw money to your account or convert points into rubles only when you reach a certain amount. By keeping a personal or family budget, you can predict in advance how long you can reach this minimum amount. In other words, when you receive income from a particular cashback program.
- The lifetime of the reward received. There are cashback programs in which the accrued reward has its own lifetime, for example, 1 or 2 years. Knowing this parameter, in conjunction with the previous two, it is possible to calculate not only the amount of monthly expenses for a specific program. As well as the period that will be required to accumulate the minimum amount for cashback withdrawal. For example, a bank awards points for spending on a card. The lifetime of these balls is 1 year. The minimum amount for converting points into rubles is 4000. Let’s consider the same category "Entertainment", as in paragraph 1. It is possible to accumulate 250 points per month. As a result, it will take us 16 months to accumulate the required amount for withdrawal.
Thus, with current expenses in this category, our points will burn. It turns out that a card with the category "Entertainment" under such conditions is not beneficial to us.
- Terms of cashback payment. In a number of programs there are restrictions that affect the ability to receive rewards. These may include, for example, the minimum order volume or spending within a month. Or the amount of own funds on the card and others.
- Financial costs. It is also not an unimportant parameter, as it allows you to estimate the real amount of income under the cashback program. Costs may include: annual or monthly service on the card, participation fee, withdrawal fee and others, depending on the conditions of a particular program organizer. For example, let’s say that the cost of monthly maintenance of a bank card with a 5% cashback in the category "Entertainment" is 99 🪙. We spend 5000 🪙 per month in this category, which gives us 250 🪙 in cashback. Then the real income for the month will be only 151 🪙.
When using cashback programs, you should also be aware of transactions for which cashback is not paid. Each program has its own. Therefore, you need to carefully study the conditions of the program. But there are some common transactions, in most programs, for which bonuses are not awarded.
Cashback in online services is usually not credited:
- For offline placed orders, for example, through the phone, mobile application of the store;
- For payment of the order with gift certificates;
- For the use of third-party bonus programs, including the store’s own programs;
- For technical reasons, for example, an ad blocker is installed in the browser, the product was added to the cart before switching from the online service, a large number of orders were made in a short period of time, and others;
You need to study in advance the full list of restrictions that may affect the accrual of cashback within the program. To prevent technical problems, you can use a separate browser for purchases in online cashback services.
Learning all the nuances
Cashback on bank cards is usually not credited:
- For receiving cash;
- For the return of the cost of the goods;
- For payment of fines, taxes and housing and communal services;
- For operations with highly liquid assets. They are also called "quasi-cash" transactions. Such as replenishment of electronic wallets, purchase of securities, payment of bets in gambling establishments, and so on.
It is better to study the full list of restrictions of a particular bank before applying for a card. Additionally, this will help in compiling a more accurate algorithm for using the card in the overall strategy for earning money on cashback programs.
Cashback in the sellers’ own programs is usually not credited:
- For the purchase of goods and services for which special prices have already been set;
- For the purchase of goods and services that participate in sales or promotions;
- For the use of third-party bonus programs.
Thus, cashback programs will be profitable if you follow all the rules of the program and follow your strategy.
TOP-5 cashback services and programs
There are many services and cashback programs. Choose any one that suits you, both in terms of participation and in the variety of partner stores presented. At the beginning of your acquaintance with these services, we recommend that you focus on well-known players.
Online cashback services
|Service name||Service description||Minimum withdrawal amount||Service commission|
|Letyshops||More than 2400 stores available. In addition to the basic cashback size of 3-6%, depending on the particular store, additional rewards are provided. This can be an increased cashback, a discount from the seller, or user promo codes.|
|The service also has a loyalty program, which accrues up to + 30% to the base cashback, depending on the level.||500||Not|
|Kopikot||More than 1300 stores available. The average cashback rate is 2-5%. Additionally, a superbonus can be accrued every 3 months. Plus, some sellers periodically set an increased cashback. There are also discounts and promo codes.||500||No, except for withdrawal to PayPal|
|Switips||More than 5900 stores available. The average cashback rate is 2-6%. Additionally, some sellers periodically set an increased cashback. Plus there are discounts.|
|The service also has a loyalty program, which pays an increased cashback + 66% to the base level with free registration using a referral link.||800 🪙||3% +70 🪙|
|Megabonus||About 800 shops are available. The average cashback rate is 2-4%. Additional discounts and promo codes apply.|
|The service also has a loyalty program that pays increased cashback up to + 50% to the base level, depending on the level.||100 🪙||No, except for the withdrawal to the card|
|smarty.sale||More than 600 stores available. The average cashback rate is 2-5%. Additional discounts and coupons apply. Plus, some sellers periodically set an increased cashback.|
|The service also has a loyalty program that pays increased cashback up to + 50% to the base level, depending on the level.||5 🪙||Not|
Bank cards with increased cashback
The table below only considers credit cards.
|Map name||Program conditions||Cashback size||Annual maintenance|
|Opencard from Otkritie Bank||The amount of cashback depends on the selected category. The following categories are available: transport; cafes and restaurants; trips; beauty and health; for all. To get the maximum cashback, you must fulfill 2 conditions within a month: 1) Make a payment for services or goods through a mobile application or an Internet bank for any amount; 3) Keep at least 100,000 🪙 on all cards.||up to 11%||Not|
|Vostorg card from Vostochny Bank||The amount of cashback depends on the selected category. The following categories are available: driving; warmly; rest; online shopping; all inclusive. Cashback is credited when making purchases over 10,000 🪙 per month.||up to 15%||Not|
|Yandex.Plus card from Alfa Bank||The maximum cashback is credited for the expenses of Yandex services, which change every quarter. Increased cashback is credited for purchases in categories: restaurants, entertainment, sporting goods and educational services. For the rest, 1% is charged. You do not need to select categories. To compensate for a Yandex.Plus subscription, you need to spend at least 5,000 🪙 per month.||to 10%||490 🪙 from year 2|
|Tinkoff Drive from Tinkoff Bank||The maximum cashback is credited for all purchases at gas stations. Increased cashback – for paying for any car services, including parking lots, toll roads, and even paying fines through Tinkoff. For other expenses, 1% is charged for every 100 🪙. You do not need to select categories. The amount of cashback accrued in upgraded categories depends on regular spending, for which 1% is charged.||to 10%||990 🪙|
|Urban Card from CreditEurope Bank||The maximum cashback is credited for expenses in the categories of urban transport, electric trains, aeroexpress, bike rental. Increased cashback is credited for purchases in the categories: gas stations, car washes, taxis, toll roads, car sharing, tire fitting, parking, car and motorcycle rental. For the rest, 1% is charged. You do not need to select categories.||to 10%||Not|
The article presents a small part of services and cards with cashback. You can familiarize yourself with all the proposals on your own, applying the evaluation principles set out in the article.
Seek and find
In conclusion, I would like to say that you can create your own strategy for using cashback programs and this is within your power. But remember that there are many rules and restrictions in the programs that can be accidentally violated. Accordingly, this will lead to the deprivation of cashback.
Plus, cashback programs motivate you to spend unnecessary money. Therefore, be sure to keep a personal or family budget and improve your financial literacy. Take control of your spending and earn from it.
In the article, we looked at what cashback is in simple terms and how to use it to your advantage. Keep using existing programs and keep track of new cashback programs. Be open to new opportunities!