Budgeting
The Cash Back Conundrum

The Cash Back Conundrum

Special apps and widgets provide opportunities to “earn” money that make it easy to find savings on your phone or computer. I like these programs, but if you’re trying to use them to help your budget, you need to follow some rules so you don’t get trapped into spending more than you normally would because you think you’re saving or earning cash. It wholly defeats the purpose.

  1. Buy only the things you need, or were intending to buy in the first place. It’s not worth it to buy a certain brand of bread or chips because you’re promised $1.00 in savings if purchasing that product is actually more money than you would have spent if you bought your usual potato chips. You are only saving money if it’s both similar to what you planned to buy anyway AND cheaper.
  2. Remember that your time is worth money. There’s an opportunity cost for everything. Staples, the office supplies store, used to advertise that it offered an “easy” button for back to school and work needs. The apps and programs you use to save money should be simple and NOT time-consuming. For me, if it takes more than five minutes to redeem savings or input my receipt, it’s a nonstarter. Whether you’re a stay-at-home mom, waiter, engineer or a professional basketball player, your time is money. Don’t waste it for a few dollars in savings.
  3. Choose wisely.  While all of these programs are free, retailers will usually only let you use one of them at a time. This mainly applies to the programs that offer a percentage back on your purchase. If you can find a way around this, let me know in comments below or e-mail me at mama@msfiremama.com. For the receipt-based earnings, nothing stops you from redeeming the cash back as long as you have a copy of your receipt.
  4. Don’t expect high or life-changing returns. I’ve been a part of several different programs over the last decade. I think I’ve “made” about $500 in total and earned several hundred dollars in gift cards. It’s not a lot of money, but it’s something. I average about $90 a year. One program, iBotta, claims its average user earns about $150 in savings. I don’t work hard for the cash back so I’m not concerned that I’m not “average.” I’m not an extreme couponer and plenty of blogs exist that can teach you more about that. My “earnings” cover the cost of a really nice date night with my husband or an outing with my family. I don’t sweat if I miss a deal or forget to log in to add my purchase. 

I recommend looking into these apps because free money is free money, heeding the rules above. You may be one of those people who buys the items that frequently pop up on sale or with a savings offer. If that’s the case, then these money-saving tools are an awesome way to help reduce costs so you can spend it on other things you value.

Here are my favorites in order of my preference:

Rakuten

How It Works

This is both an app and a website. You earn cash back by activating offers, which is usually a percentage of your purchase (that averages between 1% and sometimes as high as 15%) or a special deal. I just bought several gifts from one online store and every purchase earned me $4 back. 

For the app, you open it up and click on the retailer you want to shop at. Then it redirects you to the retailer app or the company’s web page. Shop, buy and then after you complete your purchase, Rakuten will let you know when your cash back will show up in your account. It includes earning cash back from ordering food from Grubhub, which I think is pretty sweet.

For the desktop version, I have the widget on my browser so when I go to a website, it pops up to let me know to activate the savings. 

Another great feature is you can add credit cards and link offers so if you shop in-store, you can still get benefits. 

Rakuten makes earning cash back super easy.

How You Get Paid

Rakuten issues a “Big Fat Check” on a quarterly basis via mail. You can also redeem gift cards, which sometimes gives you a bonus.

iBotta

How It Works

iBotta used to be an app only, but when I was digging into the application, I found there is now a desktop extension similar to what Rakuten has. When I revisit this topic, I’ll definitely update you on how it works.

Similar to Rakuten, iBotta also has a program where you can earn a percentage back on your purchases at online stores by clicking on the deal and being redirected to a participating retailer. iBotta differs in that it also provides a list of discounts on select products that are offered from participating retailers. The discount can be anywhere from 10 cents to several dollars, but most are around 50 cents. The cash back opportunities extend from produce, dairy, cereal, baby products, personal care, food delivery purchases from GrubHub, and even include alcohol offers. 

You must select the discounts you’d like to redeem prior to uploading your receipt or linking a retail account. The app automatically detects applicable offers, but may miss one or two. It does prompt you to add them after it does its initial scan. The next added layer is sometimes you have to verify your purchase by scanning the barcode. I’ve had several purchases that qualified for cash back that the iBotta app rejected. I don’t know why, but for the 50 cents, I didn’t spend the time reporting it to find out. For the most part, the app does work well, but requires a lot more effort than Rakuten. 

iBotta does allow you to link certain loyalty accounts like Target or King Soopers. After you shop and select your discounts, all you need to do is hit the “Redeem” button after you pick the retailer and it will search for offers and apply them to your account. No receipt upload necessary. It can be hit or miss in identifying all the ones that apply. You have to e-mail iBotta directly to claim any missed offers. Again, for the small amount of discounts, I’m not reviewing my earnings on iBotta to make sure everything applies unless it’s one for $4 or more (and more importantly, I remember to do the review).

You can also take advantage of iBotta’s “Any Item” discounts that include money back for just uploading a receipt, buying bananas or purchasing any brand of milk. These have the smallest cash back values, but it’s easy enough to select. Honestly, the bulk of the funds I earn are from these categories. Our shopping cart is heavy on fresh produce, dairy and cereal so any of the brand name discounts don’t really apply to me unless it’s for my favorite brand of cheese or oatmeal. 

Special offers pop up during the holidays, the Superbowl, new seasons, etc. that allow for bigger cash back opportunities. One example is getting an extra bonus if you bought a specific chip and dip combo during the week before the Superbowl. Another is when the summer started, purchasing a specific brand combination of ingredients for s’mores also provided a bonus. 

Another feature of iBotta is you can purchase gift cards through the app.  I have not tried this, but in the case of Home Depot, it looks like you can buy a $10 gift card and you’ll earn 20 cents back. That could rack up a lot of earnings during the holidays. 

Don’t get trapped into spending more than you normally would because you think you’re saving or earning cash. It wholly defeats the purpose.

There are a ton of ways to earn cash back with iBotta, but you need to go in and physically select the items to take advantage of them. It’s a little clunky for me so I just default to the offers that are easiest to redeem and not stress it.

If you have the time, it may be worth it to sift through all the offers, but remember everything has an opportunity cost. Could you earn more cash if you were researching real estate investment deals? Would reviewing and tweaking your budget be a better way to find money to put toward money-making opportunities with higher returns?

How You Get Paid

One benefit of iBotta is that once you redeem $20 worth of earnings, you can have it directly deposited into your bank account or to PayPal within a day or two of your request.

Honorable Mention

There are a lot of these kinds of apps popping up these days. Here are two more worth noting:

Honey

How It Works

Honey is similar to Rakuten in that it automatically pops up when you open a website for a participating retailer. It also has an app you can use from your phone. It differs in that instead of earning cash, you earn “Gold” that is only redeemable for gift cards. 

Three very cool features of Honey are the Savings Finder, Droplist and Amazon Best Price. The Savings Finder will identify available offer codes and then apply them at check out. It finds the one that will give you the deepest discount. 

Droplist allows you to add a product and track when the price drops on that item. It will send you a notification via e-mail or the browser extension to let you know when that happens. 

By far, the best feature of Honey is the Amazon Best Price. If you’re like me, you are regularly shopping on Amazon. Honey’s add-in will check the item you’re reviewing and let you know if you found the best price on Amazon for whatever product you’re looking at. It happens automatically and it’s beautiful. Then, if a better price is available, you can click on the add-in and it will take you to the seller that has the best deal. One caveat is sometimes a better deal may be for an item that is not available for Prime. For me, sometimes the convenience of getting it sooner is worth more to me than a certain discount (or, for example, if I forgot to get a birthday gift and I need it pronto).

How You Get Paid

Honey only offers gift card redemption and you have to earn 1000 Honey Gold points before you can get one. I’ve had Honey for at least a year and still haven’t gotten there.

Honey’s features outside of the cash back opportunities are definitely worth downloading. You don’t have to purchase anything to take advantage of the Savings Finder, Droplist or Amazon Best Price. Easy buttons.

Checkout 51

How It Works

Checkout 51 works similar to iBotta where you need to select offers and upload receipts to earn cash back. It also has the feature where you can earn a percentage of your purchase from participating online retailers. I could not find an extension to add to a browser.

I downloaded both iBotta and Checkout 51 around the same time. I was able to earn money a lot faster with iBotta. After I earned the $20 minimum on Checkout 51, I stopped using it. 

I opened the app for the first time in a while and found it has a couple of new ways to earn cash back that weren’t available when I first started using it.

The first is discounts on gas. When you click on the tab, a map pops up showing the participating retailers, the price of gas at that location and the discount per gallon. According to the app, all you have to do is select the offer at the gas station of your choosing. Then within four hours, you need to upload your receipt to redeem the offer. I haven’t tried this yet, but I will the next time I need to fill up my car. With gas prices, there is generally one retailer at a specific location that beats the rest consistently. However, I’ll need to double check that against this application and see if I can do better. 

The other new discount feature is for pharmacies. Eligible retailers include Walgreens, CVS, Kroger, Walmart and Rite Aid, but that’s not a complete list. This discount “card” is supposed to work in conjunction with your insurance. According to the app, you just need to show it to your pharmacist before you pay for your prescription. I have not personally used this function, but it could come in handy if you have recurring medications.  

How You Get Paid

Checkout 51 requires a minimum of $20 in redeemed offers and then they will mail you a paper check upon your request.

The Summary

You need to review the available cash back earning apps and figure out which one offers you the most benefits. While all of the programs are free, you need to find the ones that have discounts that make sense for your needs, take the least amount of time to use and provide real benefits. Don’t get sucked into purchasing something just to get the discount. Lastly, remember to evaluate the opportunity cost of your time spent trying to realize the earning opportunities.

Did I miss any great features of these programs? Do you use another app not mentioned here? Which app is your favorite? Let me know in the comments below.


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