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By Martha C. White
April 16, 2021
Hands with a phone, purchasing clothes and saving money through Rakuten app
Money; Getty Images

You’ve probably seen ads for high-tech tools and platforms that promise to save you money — and maybe even earn some — just by shopping online.

If that’s not ringing a bell, we’ll point you to Elton John: If you watched commercials at all during the holidays, you probably found yourself singing along to a “Rocket Man” remix — until you realized, wait, what are they actually saying?

That was an ad for Rakuten, one of the better-known companies that dole out cash-back rewards for buying stuff online that you probably already purchase on a regular basis. It might sound too good to be true, but these tools can indeed make online shopping a little more rewarding — and they’re all free to use.

Whether you’re shopping for a hammock, hairbrush or a pair of huaraches, the chances are pretty good that one of these apps can earn you a little money with your purchase. Here’s what you need to know before you cash in.

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How do apps like Rakuten work?

Apps like Rakuten and Honey can save you money in two different ways: By searching for the best active promo codes applicable to the items you want to purchase, or by giving you a percentage of the cost of those items in the form of cash-back rewards.

These tools come in a few different forms, making it easy to use them however you like to online shop, including mobile apps for iOS and Android users, and browser extensions for those who prefer shopping from their computer. All of the companies mentioned here have a browser extension that works with Chrome, and most are compatible with other commonly-used browsers like Firefox and Edge.

Some of the biggest players in this space (like Rakuten) started out with a focus on cash-back offers and then added other features like promo codes and flash sales. Others started out as price-comparison tools (Honey) or places to find coupon codes (RetailMeNot) and then expanded into offering cash-back rewards. One gripe about all of them is that they tend to blur together earning money and saving money. You’ll get the most bang for your buck if you’re a disciplined shopper who can resist the allure of a barrage of sales pitches.

How do they make money?

The business model for cash-back tools generally works the same way: Stores like Macy’s or Target pay a bounty to affiliate partners like Rakuten in exchange for sending them shoppers. Rakuten then earns a percentage of what you spend, keeps part of it as a commission, and passes the rest along to you.

Depending on the company, you may have to hit a minimum threshold of cash-back earnings before you get paid. At Rakuten, for instance, rewards are issued in $5 increments. At Honey, you need to earn the equivalent of $10 to redeem your rewards.

As with old-school store coupons, there are sometimes specific products, brands or categories that are off-limits for earning cash back. Before you buy — especially on a big-ticket purchase — read the fine print to make sure whatever you’re purchasing is eligible. (Honey's terms of use, for one, say the company won't make that determination until after you've paid for the item).

It’s also important to make sure you’re following the app's user instructions, like verifying that your browser extension has the cash-back feature activated. Most won't let you use competing apps at the same time, so while you can toggle between tools like Honey and Rakuten to see which one will give you the best deal, you'll have to switch one off to complete the purchase. If you have ad blockers installed, you'll probably need to disable them for these tools to work.

How much money can I make?

Cash-back percentages are usually in the low- to mid-single digits — for hot categories like electronics or big-ticket ones like appliances, you might not see much more than 1% or 1.5%, but sometimes retailers will offer special short-term deals offering as much as 20% cash-back.

Most of these tools also offer signup and referral bonuses: Right now on Rakuten, you get a $10 cash-back bonus after you sign up and spend your first $25.

The online stores that participate in these programs cover a wide swath of retail: Department and big-box stores, clothing and accessory stores, hardware stores, office supply stores, sporting goods stores (see below for specific examples). Nearly all of these apps also have short-term pop-up sales on certain categories at a particular retailer, or even individual items. (For instance, BeFrugal is promoting duvet sets at Macy’s for 70% off right now — on top of the up to 6% cash-back bonus you can earn.)

You might only earn a few dollars at a time, but that money can definitely add up: One shopper profiled by the Huffington Post saved more than $2,300 shopping on eBates.com (now Rakuten). Granted, that was over a 20-year stretch, but other savings-focused bloggers have reported earning more than $100 annually.

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What about privacy?

You do have to give away some of your personal data to sign up for these tools. These companies' entire business model hinges on being able to trace the digital path you take to reach a merchant — and if you wade through most of these sites’ terms and conditions, you’ll see that signing up gives them the right to track your shopping.

“They need to, in essence, follow you from the website to the merchant,” says Edgar Dworsky, founder and editor of Consumer World.

What's the best cash-back app?

If you want to get really meta with your comparison shopping, Dworsky suggests checking out the websites CashbackMonitor.com and CashbackHolic.com; two in-depth resources for comparing different cash-back rewards deals.

A look at those comparison sites shows just how big the universe of cash-back platforms is. Here's a breakdown of the most popular.

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Rakuten

Rakuten (formerly eBates.com) is probably the best-known of these tools. It sends out rewards in $5 increments, which users can withdraw in $5 increments every three months.

The company has affiliate partnerships with more than 2,500 online retailers; e-commerce giants like Walmart, Kohl’s and Sam’s Club are participants, as are higher-end brands like Saks Fifth Avenue, and speciality stores like PetSmart. One notable omission: Amazon is NOT a Rakuten partner.

Honey

Honey, which was bought by PayPal in 2019, is another big name in this space, although it has built its reputation more on savings tools. One Honey feature lets you track how an item’s price has changed over time, so you can figure out if you should buy that cordless drill now, or hold out for a sale. The app also lets you set up alerts that tell you when the price drops so you don’t have to keep checking the store’s website.

The platform’s rewards program, Honey Gold, has a similar set-up to cash-back platforms, in that you can earn a small percentage back on eligible purchases. But instead of cash, you earn reward program credits, which can be applied towards gift cards for the stores where you shop. If you tend to do most of your online shopping at a few specific retailers and would use those gift cards anyway, that's probably not much of a drawback. Honey has more than 4,500 affiliated retailers, including Lowes and Sephora, according to the company.

Capital One Shopping

You don’t need a Capital One credit card to use the Capital One Shopping (formerly Wikibuy) browser extension or app, which offers cash-back rewards, coupon codes, and the ability to track prices and set up alerts.

Similar to Honey’s reward program, you won’t have the option to get your “cash” back as cash — instead, you'll earn a percentage back in “shopping credits,” which are redeemed in the form of merchant gift cards.

RetailMeNot

RetailMeNot started off as a destination for shoppers seeking coupon codes, but it has branched out into the cash-back space as well. It is available as both a browser- and app-based tool (you can shop through the site or download a browser extension, which the company says won’t interfere with other extensions you might have downloaded). RetailMeNot says it has partnerships with more than 1,000 retailers.

BeFrugal

BeFrugal offers cash-back rewards as well as coupons and flash sale deals. The site's biggest selling point might be its claim that it passes along 100% of the commissions it gets from retailers. (BeFrugal says it makes money by selling ads on its platform.) You can shop via mobile app or through a browser extension — or, if you don’t want to download anything, you can just shop right from BeFrugal.com.

The company says it has affiliate partnerships with more than 5,000 online stores. It recommends disabling or removing other cash-back browser extensions, warning, “They may take credit for the sale and therefore void any BeFrugal cash-back rewards.”

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