What is cashback and how does it work?

Cashback cards and websites give you some money back in your pocket as a reward for your everyday spending. You might want to use it because it could essentially be free money. Here’s how cashback works – and how you might make the most of it.

Cashback is basically a reward for spending money, whether that reward is coming from a card in your wallet, an online site or straight from your bank. The deal goes like this: you spend money and get a percentage back from the provider. (This might be confusing as sometimes a retailer will ask if you would like to get some physical cash back with your purchase, but we're referring to the reward version in this article.)

Cashback from your credit card

A cashback credit card gives you a percentage of what you’ve spent back to you as credit. When you get it back depends on the type of card you have, but it could be monthly, quarterly or annually. Let’s say your card gives you 2% back in certain shops. If you spent £200 in a department store, for example, you’d get £4 back as part of the deal.

How much you get back depends on the lender. Some entice you with higher introductory rates and level off at a lower rate after a period; others stick to the same rate all the time. Some vary their rate depending on how much – and where – you spend your money. So you could get a different cashback rate when you go to the supermarket compared with a department store, for example.

Just remember, credit cashback cards may vary in terms of the benefits you’re going to get based on your spending habits, so it can be important to shop around.

When’s the best time to use a cashback credit card?

Stick to using the card for regular, everyday purchases, knowing that you’re able to pay your bill in full every month. That way, you’re making the most of the cashback savings and avoiding paying interest on your balance. Think of it as ‘recycling’ your money into the food, clothes and other things (like coffee or your taxi account) you need on a regular basis. It’s not a great idea to see it as a green light to splurge on things you weren’t planning to buy – simply because you were tempted by the offer.

Cashback through a bank account

If you check out your bank’s offerings you might find they have a cashback incentive, too. Some banks offer rewards once you’ve activated them online (anything from supermarket spending to a trip to the cinema). It’s best to check your existing account to see if there are any cashback offers that could suit your spending habits, as well as checking comparison or cashback sites to find the best offers for you.

What are cashback sites?

You might have heard about (or seen) cashback websites, which you use to get to another site (where you’re looking to buy something). They’re like the gateway or ‘middleman’ and reward you for using them – to buy anything from clothes to your car insurance – by giving you a slice of their commission.

Some of these sites are free to sign up to, and some charge a fee and come with ‘premium’ level memberships, which (you guessed it) can come with higher fees. You might need to build up a certain amount of cashback before you can use it, too, so it’s always worth checking the small print when you sign up.

Getting cashback from us

The Chase card helps you collect cashback as you buy everyday things and, as it's debit rather than credit-based, you're spending what you've already got in the bank. We work out the cashback due to you based on how much you’ve spent and pay it back to you daily. This could be a helpful boost during those high-spending periods (Christmas or birthdays anyone?) when you know you can get something back on your purchases.

Approached in the right way (and used for the regular everyday items you are used to spending your money on) a cashback card could help you save while you spend, giving you more flexibility and spending power in the long run.

1% cashback on everyday debit card spending. Available for your first 12 months for new customers. Max £15 per month for applications from 9 May 2023. Cashback exceptions apply.