How would you like to start earning cash back on your daily purchases? Whether you’re doing your weekly grocery shopping or buying gifts online, there are a number of easy-to-use cashback apps that reward you when you spend money.
As consumer credit card debt continues to grow, every extra dollar counts, and apps like these can help put some extra money back in your wallet.
Below, I’ll outline how cashback apps work, share some of our top picks for the best ones in Canada, and explain how they’re different from traditional credit cards.
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How cashback apps work
For the most part, cashback apps are incredibly simple. Here’s how they work, in a nutshell:
- Sign up for a cashback app
- Download the app on your phone or use it online (depending on the app)
- Shop for eligible cashback items
- Accumulate cashback rewards in your account
- Cash your rewards in for gift cards, cash, store credit, or more
Cashback apps are typically partnered with major retailers and store chains. Some apps offer cashback credit on any items purchased with one of their partners, while others may require you to purchase specific items or categories.
These apps typically require users to accumulate a certain amount of cashback credit before they’re allowed to redeem them. This could range from $5 to $20, depending on which app you’re using.
Online cashback apps
You’ll come across two types of cashback apps — online and post-receipt apps.
Online cashback apps are very popular as online shopping continues to become more popular post-pandemic. Once you sign up for the app, you’ll be shown a list of the app’s retail partners and a list of certain specials or deals each retailer runs.
For example, you might receive 5% cashback at Nike or 3% cashback at Best Buy. Online cashback apps typically require you to shop online through the retailer’s store. You’ll either use a desktop extension to shop, or you’ll shop through the cashback app’s built-in shopping platform that allows you to access the retailer’s online store.
Post-receipt cashback apps
On the flip side, some cashback apps are what I like to refer to as “post-receipt” apps. For many, these may be the simplest and most practical, as they often apply to everyday purchases made at grocery or hardware stores.
Some offer a set amount of cashback when you shop at a partner retailer. Simply scan your receipt once you’re finished shopping, and your cashback will be credited to your account.
Other cashback apps offer rewards for purchasing specific items. In this case, you’ll scan your receipt after shopping, and the app will identify any eligible items you purchased and reward you accordingly.
How are cashback rewards paid?
Each app has its own method of paying out accumulated rewards. Some of the most common include:
- Gift cards to a retailer of your choice
- Mailed cheque
- PayPal credit to your account
Some apps may also offer physical prizes, such as a pair of headphones or other gadgets.
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Top 3 cashback apps in Canada
Here are three of the most practical and easy-to-use cashback apps that I’ve tried so far.
1. Rakuten
Rakuten has over 1.7 billion global users, making it one of the largest cashback apps in the world. It’s an online cashback app that allows users to earn points as they shop online with Rakuten’s partnered brands and retailers.
One of the best features of Rakuten is that the platform offers special promotions, such as double points during holidays and seasonal sales, allowing you to earn even more cash back. Rakuten pays its users via cheque or PayPal credit.
2. Drop
Drop has a 500+ brand network, allowing users to earn cashback at many of their favourite retailers. The app has a great user interface, making it easy to use (even for those who aren’t tech-savvy).
As you shop online with Drop’s partner retailers, you’ll earn “Drop points,” which can be redeemed for gift cards, cryptocurrency, or donated to charities.
The one downside of Drop is that it’s online only, so you can earn points by scanning paper receipts.
3. Checkout 51
Checkout 51 enables users to earn rewards on everyday purchases.
After signing up, users can browse deals from preferred brands and stores, add them to a list, and shop as usual.
Receipts are scanned and uploaded to the app, which applies any eligible cashback rewards. Accumulated rewards can be cashed out for gift cards and more. The platform recently began offering cashback on fuel purchases as well!
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Are cashback apps better than credit cards?
At this point, you may wonder, “What’s the difference between cashback apps and credit cards?”
While both methods can help you earn cashback from your purchases, there are a few key differences between the two, outlined below:
| Cashback apps | Credit cards |
| Allow you to earn cashback from specific retailers. | Allow you to earn cashback on almost all purchases, although the percentage varies by category. |
| Doesn’t affect your credit score in any way. | Can help (or hurt) your credit score, depending on how it’s used. |
| No credit check is required. | A credit check is required to apply for a credit card. |
| Cashback rewards are usually issued as gift cards, mailed cheques, or PayPal credit. | Cashback rewards may be used to cover recent purchases or may be mailed via cheque. |
The main difference is that cashback apps aren’t linked to your credit. These apps allow users to earn cash back without the hassle of going through a credit check or paying interest on balances carried over.
Of course, this is also their main disadvantage.
Credit cards allow you to earn cash back and build your credit score/history as you use them responsibly. However, if you use a credit card irresponsibly or carry balances over from one month to the next, you could be subject to high-interest rates and see your score drop.
Ultimately, cashback apps offer similar cashback benefits to credit cards without the responsibility of managing a credit card.
Get the most out of your cashback app
If you want to earn the most cash back, I would suggest pairing an online cashback app like Drop or Rakuten with a receipt-scanning cashback app like Checkout 51. This will allow you to earn rewards on both fronts, as you shop online and in person.
It’s essentially free money, and no credit check is required for these apps, so there’s no reason not to try it!
Written for Daily Hive by Christopher Liew, a CFA Charterholder, former financial advisor, and the creator of Wealth Awesome.