How to Get the Most Out of Cash-Back Sites

The holiday season is coming, and stores want you. Or your money, anyway. That makes you popular among retailers -- and cash-back websites.

If you've seen the commercials or heard the term, but you're not sure how cash-back sites work or if they are a smart way to shop, here's a rundown on what these sites can and can't do for you.

How cash-back sites work. The concept is simple, and it's similar to the cash-back programs many credit cards offer. In this case, instead of going directly to a retailer's online store to shop, you go to a cash-back website. There, you click on the retailer's link (assuming the store you're looking for is on the list) and purchase products. Users register with the cash-back site and are returned a small percentage of what they spend via check or PayPal. (Cash-back sites get a commission for bringing customers to retailers' sites, which is how they can afford to give you some of your money back.)

When and how much will I get paid? It can take several months -- and sometimes much longer -- before you receive your money. It can depend on when you accrue a certain amount of savings, like $5. If you go to a cash-back site once and make a tiny purchase but never shop there again, you may never see your money.

The percentage you get paid varies, too. Five percent is the norm, but sometimes it's a bit less and sometimes quite a bit more, like 12 percent.

The big players. The most successful cash-back site is arguably eBates.com, which has been around since 1998. But there are many other big-name sites, including Sunshine Rewards, FatWallet.com, Extrabux, UPromise (with a focus on saving for college), Ibotta.com, Savings.com, Coupon Cactus, BeFrugal.com, ShopAtHome.com, SavingStar, MyPoints, Swagbucks and CouponCabin.

What to watch out for. Cash-back sites generally have a good reputation. But if you're considering one you aren't familiar with, type its name into a search engine along with the word "complaints" and see what comes up (although realize that even the best cash-back sites likely have some negative reviews). If there are a slew of bad reviews, however, that's a sign the site may be mismanaged. And if any cash-back site requires you to pay a membership fee, it is probably a scam.

"I only use a handful of sites that I trust -- the ones that are very reliable and super easy to use. If I can't sign up within three clicks, I'm not going to sign up for it. That seems to keep you from getting into the spammy sites," says Lauren Greutman, of Syracuse, New York, who runs a budgeting lifestyle blog, IAmThatLady.com.

Users get a lot of emails containing coupon offers from cash-back sites, Greutman says, so she recommends creating a separate email account to use on these sites.

Strategies to improve your experience. Even with the most reputable cash-back sites, there are ways you can stumble and be disappointed. Keep these points in mind:

Different cash-back sites have different deals. You may want to compare the percentage you're getting back with other cash-back sites, Greutman says. She says she uses Ebates.com the most, but she also goes to Savings.com and Ibotta.com, among others. She tends to stick with Ebates.com if the cash returned from the retailer through the other sites is less than a 1 percentage point difference.

"They always pay every three months. They call it a big, fat check, although mine's not usually a big, fat check," Greutman says. She says on average, she tends to get $25 a quarter and figures that in a typical year, she might receive $100 in cash back from her online shopping.

The cash back comes off the retail price. Sorab Bhardwaj, CEO of Zalyn.com, a website offering rental car deals, also uses Ebates.com and says he once was surprised to see that the cash back he received on airline tickets was much lower than he expected.

Bhardwaj called customer support only to be reminded that the cash back comes off the retail price of the ticket. His airline ticket price included a lot of taxes and was loaded with airline fees.

Think big. The cash-back concept can theoretically pay off if you're only buying a pack of gum, but you can really start to see the value in these programs when you spend money on a business trip or vacation. Most of the cash-back sites have a travel section, where you can find hotel, airline and travel sites such as Expedia and Orbiz, so you can purchase your tickets, rooms and rental cars -- and then later, get cash back.

"It can really pay off if you're buying airline tickets or hotel stays -- those kinds of big purchases we don't think about -- if you go through a cash-back site," Greutman says. "I think one year, I received a $75 check for one quarter."

Whatever you're purchasing, take time to compare cash-back offers. "I don't bother going through them for stores that offer less than 3 percent cash back, unless I am making a big purchase," Bhardwaj says.

Don't think of it as earning money; you're trying to save money. Some cash-back sites suggest that you're earning money while shopping. You are not. Instead of getting a 5 or 10 percent off coupon upfront, you're getting the percentage off later. Granted, it's fun to receive that savings in the form of a check, but it still represents money you have saved, not earned.

In other words, if you do a lot of online shopping and focus on how much money you'll get back if you buy expensive merchandise, you may not ask yourself if you really need the product in the first place. And while imagining the big, fat check you're going to get, you might forget to look elsewhere to see if there's a better deal.