Shop online, and you get the chance to drive a hard bargain

Consumers are using cashback sites to cut the cost of everything from RAC cover to wine. By Helen Monks

How do you fancy getting paid to shop? It sounds too good to be true, but for canny consumers who shop online, there are a growing number of sites that will pay you cash every time you make a purchase.

According to the Cashback Loyalty Association, there are at least one million regular users of cashback sites and about four million registered individuals.

The sites act as gateways to online retailers and financial services providers, including Debenhams, Expedia, Currys, M&S, Dell, Tesco, American Express and Legal & General. Companies pay a referral commission for business passed on to them via cashback sites, and the sites pass some or all of the payment back to the online shopper.

Cashback deals on sites such as www.cashbackkings.com, www.wepromiseto.co.uk, www.quidco.com, www.greasypalm.co.uk and www.topcashback.co.uk, range from 2 per cent up to as high as 75 per cent of the total amount spent.

Current deals available include £25 cashback on RAC Rescue breakdown cover, which could take the cost of annual cover down to £8. You can also get £50 cashback for a dual-fuel switch to Eon or £62 cashback for a dual-fuel switch to Scottish Power.

Cashback site shoppers can get 3.5 per cent back on purchases from Currys, 5 per cent from Dell, 10 per cent from HMV and £50 cashback should they open a bank account with Alliance & Leicester. Users can also build up extra rewards of a pound or two for recommending a cashback deal or site to a friend.

Earning cashback when buying a computer, washing machine or a case of wine you were going to buy anyway can make good financial sense. But consumers should stick to their guns and not be tempted to buy just because of cashback points.

Remember, too, to shop around anway before plumping for a cashback deal, especially in the case of utilities and financial services products like insurance. You might be able to save more on utilities bills via comparison sites such as uswitch.com. This also applies to car, home and travel insurance. But if the best provider happens to be linked to a cashback site, buying through this portal is a no-brainer.

Before signing up to a site, make sure you're clear about how the payback work. Some sites give users 100 per cent of the commission retailers pay back to the shopper, but retain the first £5 of cashback the shopper earns each year, and/or ask for a £5 joining fee. Other sites do not charge these fees, but hold back a percentage of the commission.

Joining a site normally involves a quick and easy registration process. Then you can browse the deals, or simply go about your online shopping as normal and then, when you're ready to buy something you really want, check to see if you can earn money back through your cashback site.

Bear in mind that you will pay the same price as any other shopper for the goods, and then receive cashback in your account, normally within 30 days.

Customers claim their cashback reward differently, depending on the sites they choose. At wepromise.co.uk, once the retailer has paid over the commission on your purchase, it pays out your cashback monthly, either by BACS or electronic Amazon gift vouchers, with customers opting for gift vouchers receiving an extra 2 per cent of the value of the cashback. At Cashbackkings.com, customers can ask for a payment in any week, either as cash or Amazon or CDWOW vouchers.

Consumers likely to generate the most cashback are those using cashback sites for the maximum amount of purchases, perhaps picking up just a few pence each time. If this seems too much like hard work, you could just look save on major transactions.

"There are two types of users: ones who will use the site to buy absolutely everything and build up rewards; and others who just use the sites for bigger purchases like holidays and insurance," says Ahmed Zaman, Cashback Loyalty Association treasurer.

It's a good idea to pick one or two sites to use often to maximise your cashback. In picking the best site for you, look for those linked up to the kind of retailers you're likely to use regularly.