I made nearly $1,400 using cash-back apps Rakuten — and you can do the same

By Charles Passy

Cash-back apps like Rakuten, RetailMeNot, Ibotta and Capital One Shopping can offer an easy way to rack up rebates on purchases

Most of us know the basics when it comes to saving money while shopping. We look for sales of any kind. We take advantage of loyalty-program discounts. And we use a credit card that offers cash back or points good for travel, gift cards or merchandise.

I've done all that for years, but I've also tapped another way to save a few dollars here and there. And in time that money has started to add up -- in fact, it's amounted to $1,377.26.

That's the figure I've earned over about the past decade from Rakuten (formerly called Ebates), one of the largest players in the world of cash-back apps and platforms. You may have seen the company's commercials, particularly a noteworthy Super Bowl spot featuring Alicia Silverstone in full "Clueless" mode. But when I recently surveyed some friends and colleagues about Rakuten, I was surprised to discover how, well, clueless they were about the company -- to say nothing of its many competitors, including Ibotta, RetailMeNot and Capital One (COF) Shopping.

Which strikes my cheapskate-minded self as beyond tragic. These apps, which can be accessed via your computer or through your phone, often require very little effort on the user's part, and they charge you nothing for signing up as a member. Essentially, they connect you with brands and retailers, including almost all of the familiar names. In the footwear category alone, the list ranges from A (Adidas (ADS.XE)) to Z (Zappos). Then, they give you cash back based on your purchase -- sometimes as little as 1% of what you've spent, but more typically in the range of 3% to 6% and occasionally higher.

To be sure, at times the rebates are almost laughably inconsequential. Last month, for example, I got a 33-cent rebate on an eBay (EBAY) purchase via Rakuten. But I also got a $32.80 rebate on a purchase from a contact-lens retailer via Rakuten. So it all depends on the amount you spend and the cash-back percentage offer from that particular store. But it indeed adds up in the end -- and that $1,377.26 I've redeemed has helped me pay for more than a few bills.

I'm not alone in my belief that these platforms are an invaluable tool for savvy shoppers, but also sadly an often overlooked one. "I can't believe more people aren't on them," said Chris Lewis, director of research at FinanceBuzz, a personal-finance website. Lewis added that when you're getting money back on items you were already planning to buy, "it's a no-brainer."

Still, the message must be getting out there. A Rakuten spokesperson notes that the company saw double-digit growth in its membership in 2022 and is experiencing the same in 2023. Add it up, and Rakuten now has 17 million members.

So, if you still aren't on the cash-back bandwagon and want to start reaping the rewards, what should you know? Read on for a basic primer...

Which platform should you use?

Rakuten is arguably the 800-pound gorilla in the cash-back game -- the company says it's given out $4.6 billion in rebates since its inception in 1999 -- but as I've noted, there are plenty of other outfits. Each app has its own approach for earning cash back -- and each has its pros and cons in terms of ease of use and other factors.

Among Rakuten's many strengths: It has a very deep list of retailers on its platform, and it also offers cash back for in-person shopping with some stores. But Ibotta is a good option in other respects since, in addition to offering rebates through retailers, it also offers rebates for individual products (say, $1.50 off a 12-pack of Mountain Dew -- kinda like a modern-day version of a clippable coupon). And Capital One Shopping will provide you with lots of coupon codes to double down on your savings beyond the retailer rebates.

But there are yet more choices, even though I can't say I've tried all of them. Upside, for example, is a cash-back app that focuses especially on gas stations. Dosh is a cash-back app that's said to be good for restaurants and travel.

You get the point: There's an app to suit just about every shopper's tastes and interests.

Are you limited to just one app?

Absolutely not. Since different apps have different benefits and features, there's no reason to swear allegiance to just one. And if you want to invest a little time before you make your purchase, it may be worth seeing if one app has a higher-percentage rebate from a given retailer than another -- as there can be some variation.

Just remember that the more you spread your shopping around with multiple apps, the less your rebates will grow with each individual one. Also, it's generally not permissible to use two platforms on a single purchase -- so no double-dipping, in other words.

Are these apps really that easy to use?

In my experience, yes.

I do most of my online shopping with my laptop, and I've installed the Rakuten Chrome extension on it. As a result, when I visit any shopping site that Rakuten has partnered with, a pop-up window alerts me of a potential rebate ("Activate 6% Cash Back") and all I need to do is click on that window to confirm I'd like to take advantage of the offer. I then shop on the merchant's site, and the rebate should automatically come through (well, more on that later).

But I don't have to use the Chrome extension. I can also go to Rakuten's site itself and then get linked to the merchant that way. Or I can use my Rakuten phone app.

The same process, more or less, applies to the other apps. In fact, since I've installed Chrome extensions for some other apps, I usually see a few pop-up windows signaling the various cash-back offers they have. That allows me to compare which offer is the best, though I tend to stick with Rakuten because I like to consolidate my rewards.

How do you get your money?

Again, it depends on the app. But it can take the form of a check or a remittance through PayPal, or even a gift card from a retailer. Some apps require that you earn a minimum amount before you can cash out the rebates. Rakuten sends you the money automatically every 90 days.

Can I use these cash-back apps when I shop on Amazon?

Generally, no -- and that's a major drawback to them. Your best bet for saving from Amazon, at least in my experience, is to use the Amazon Visa credit card, which offers 5% cash back on purchases from Amazon.com, Amazon Fresh and Whole Foods Market.

One notable exception to this rule is that you can find some Amazon savings via Ibotta, but Ibotta notes the "offers are only available for select categories and not on an entire Amazon purchase."

Any other caveats to keep in mind?

I stick to my conviction that these apps are easy to use, but I've heard others say they find the extra steps involved not worth their time. And some may not like the idea of sharing their personal information. "A lot of people are concerned about privacy," said Kim Palmer, a personal-finance and banking expert at NerdWallet.

It's also worth noting that it pays, literally, to keep track of your rebates. I've had instances where an expected rebate didn't post, and I had to contact the app to sort things out.

Finally, it almost goes without saying, but I'll say it anyway: You should use these apps only to make purchases you were already planning to make. You don't "profit" if you buy things you don't need.

Any other perks?

Many of the apps have sign-up bonuses -- I've seen ones commonly ranging from $10 to $20. And there are referral bonuses if you get friends or family members to join -- with Rakuten, you get $30 for each referral (and those you referred get $30 after they make their first purchase with the app).

How are these apps able to give away all this money?

That's simple: They have partnerships with the retailers to cover the rebates. In essence, the apps are marketing vehicles to drive shoppers to particular merchants, but the merchants are the ones that pay for that connection. Or, as Rakuten explains the model on its website, "Rakuten works by getting a commission from stores for sending you their way, then sharing it with you" as cash back.

-Charles Passy

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07-04-23 1145ET

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