This is one of the few times when "If it sounds too good to be true, it probably is" doesn't apply.
Ben Rose saved about $100 on law textbooks. Jenny Chien paid 43% less for contact lenses. Nellie Whittlesey scored $175 worth of kitchen hardware for $115.
They aren't just smart shoppers. They're smart shoppers getting cash back.
"Cash-back" sites such as Mr. Rebates, Ebates, Bing and FatWallet.com are affiliate marketers, which means they get paid for sending customers to online merchants. Then they share a slice of that fee with us, the customers. You're still buying from Sears, Old Navy or whomever -- you're just adding a step to the process by clicking through the cash-back site. Additional perks such as coupon codes, free shipping and rebates can make the deals even better.
Rose, who's going to law school in Boston, will get back at least $200 from Bing even though he buys relatively few items. "I'm only 26, but I'm pretty adamant about getting the best deal on everything," he says. (Note: Bing is owned by Microsoft, which publishes MSN Money.)
That brings me to an essential fact: Cash-back rebates are not a license to overspend. They are simply another way to stretch money, like a manufacturer's coupon or a clearance sale. Play the game right, though, and you'll come out ahead. Here's how the game works, plus a few tips from those already saving hundreds.
Sweetening the deal
Rates tend to range from 2% to 7% but can be considerably higher, especially around the holidays. Becky Ford used Bing to get 25% cash back and free delivery on play equipment from Wal-Mart last Christmas. Ford runs a site called CompareRewards.com, a primer on cash-back and other rewards programs.Any "holiday" will do. Mr. Rebates promoted 17% cash back on certain items around St. Patrick's Day. During "March Cash Back Madness" at FatWallet, a number of merchants doubled their percentages.
Here are three of my recent cash-back purchases:
- When I bought a laptop computer, not only did I get cash back and free shipping, I was also offered a printer-scanner-copier free after rebate. The cash back was $37.87 and the rebate $79.99.
- I bought two domain names because I'm starting my own site -- isn't everybody? -- and scored a $10 discount offered to cash-back buyers plus a temporarily higher cash-back rate that added up to $4.50.
- I ordered new walking shoes for $5 less than the ones I bought in a Seattle store -- and paid no sales tax. Because I would otherwise have needed to take a bus to the shoe store, I saved an additional $4 plus a couple of hours of my life.
In a nutshell, here's how it works: You register with a cash-back site, or several. Say that during the course of your online shopping, you see a deal you like. You log in to the cash-back site featuring the deal you want and click on the item. That will take you to the merchant's site as a cash-back shopper. Once you check out, a portion of the item's price shows up in your cash-back account.
The loss of sales taxes and traffic at local stores comes up time and again. I will not address these topics. Let the merchants and the lawmakers sort out the sales-tax dilemma.
Continued: Warehouse prices but no membership fees