How do cash-back apps work?

Saving money is now more convenient and accessible than ever, thanks to cash-back apps. Whether you’re looking to save on groceries, online shopping or even filling up your gas tank, these apps offer a simple way to earn back a percentage of your spending.

But how do cash-back apps work, and which one is right for you? Here’s everything you need to know about how these apps function, the different types available and how to choose the best cash-back app for your lifestyle. You’ll also learn practical tips to maximize your rewards and savings.

What is a cash-back app?

A cash-back app turns your everyday spending into an easy win. By giving you a percentage of your purchases back, these apps help you save money with barely any extra effort.

Here’s how it works: After completing a qualifying transaction, you’ll earn cash back (a percentage of your spending), which you can receive as direct deposits, PayPal transfers, gift cards or store credits. The rewards usually range from 1 percent to 10 percent of your purchase, but some apps give you a better deal with special promotions on certain products or during specific times of the year.

For example, if you’re shopping online, a cash-back app might require you to access a retailer’s website through the app to earn rewards. Other apps go one step further, letting you link your credit or loyalty card so rewards are automatically tracked every time you shop — without having to visit the app each time.

While cash-back apps won’t make you rich, they can add up over time, helping you save on purchases you’re already making. The question isn’t whether to use one, but which one fits your spending habits best.

Types of cash-back apps

Several types of cash-back apps exist, each catering to different shopping habits and preferences. Understanding the variety can help you decide which app (or combination of apps) works best for your needs.

1. Retail-focused cash-back apps

Retail-focused cash-back apps partner with specific stores and brands to offer cash-back deals. These deals are typically available for online and in-store purchases. Apps like Rakuten (formerly Ebates) and Honey are popular in this category.

To earn rewards, you usually need to shop through the app’s portal or use a browser extension to activate deals while shopping online.

Rakuten, for example, gives users access to thousands of partner retailers, including popular stores like Macy’s, Walmart and Amazon. Depending on the retailer and current promotions, shoppers can earn between one and 12 percent cash back.

2. Grocery cash-back apps

For those who want to save on groceries, apps like Ibotta and Checkout 51 allow users to earn cash back on everyday items such as food, cleaning supplies and personal care products. These apps often require you to browse available offers, purchase the featured items, and then upload your receipt as proof. Once the receipt is verified, the app credits your account with the cash-back amount.

Ibotta is one of the most popular grocery-focused cash-back apps, with partnerships across major grocery chains like Kroger, Walmart and Target. Some users even stack cash-back rewards by using Ibotta alongside a store’s loyalty card or a credit card offering cash-back rewards.

3. Gas cash-back apps

Gas prices fluctuate, but with gas cash-back apps like Upside, you can earn money back on every gallon you pump. Upside works by showing users nearby gas stations offering cash-back deals. Once you fill up your tank, you can upload a receipt or link your card to automatically earn cash back.

The percentage of cash back earned varies depending on the station, but it’s not uncommon to see offers of five to 25 cents per gallon. Over time, the savings from using these apps can add up, especially for those who frequently drive long distances.

4. Credit card-linked cash-back apps

These apps, like Dosh or Drop, take convenience to another level by allowing users to link their credit or debit cards directly to the app. Once linked, purchases made at participating retailers automatically generate cash-back rewards — no need to scan receipts or shop through a specific portal.

The biggest advantage of these apps is their simplicity. You don’t have to remember to activate deals or go through the app for each transaction. For example, Dosh partners with restaurants, hotels and retail stores, offering cash-back deals as high as 10 percent. The rewards are seamlessly deposited into your account after each qualifying purchase, where you can then transfer them to a bank or PayPal account.

These kinds of apps are great paired with your regular credit card rewards.

How to use cash-back apps

Similar to cash-back sites, maximizing your savings with cash-back apps requires a bit of strategy.

1. Download the app and sign up

The first step is to download the cash-back app(s) that align with your spending habits. Many apps are free to use. The sign-up process is usually simple, requiring just your name and email. For some apps, you may need to link a payment method or store loyalty card to track your purchases automatically.

2. Activate deals or browse offers

Before you shop, browse the app to see which deals are available. Some cash-back apps require you to activate offers in advance, while others automatically apply them when you make a purchase. In apps like Rakuten, you’ll need to click through to the retailer’s website from the app to ensure you get credit for your shopping.

3. Shop and earn rewards

Once you’ve selected your offers, make your purchases online or in-store. Depending on the app, you may need to upload a receipt to verify your transaction. Some apps will automatically track purchases if you’ve linked your payment method.

When shopping online through cash-back apps, ensure that your transactions are secure. The Federal Trade Commission (FTC) advises consumers to use secure connections and trusted payment methods to protect personal data while shopping.

4. Redeem your rewards

After accumulating enough rewards, you can redeem them for cash, gift cards or other perks. Each app has minimum payout thresholds. For example, Rakuten requires a minimum balance of $5.01 before you can receive your rewards, while Dosh lets you transfer funds to PayPal once you’ve earned $25.

How cash-back apps make money

Ever wondered how cash-back apps fund the rewards they offer? It all comes down to their business model: partnerships with retailers and data insights.

When you use a cash-back app to make a purchase, the retailer pays the app a commission for driving the sale. The app then shares part of that commission with you as cash back. This is a form of affiliate marketing — retailers essentially pay for customer referrals. For instance, if you buy a pair of shoes through Rakuten, the retailer gives Rakuten a percentage of the sale, which Rakuten splits with you.

Some apps also earn revenue by selling aggregated, anonymized data about spending habits to third parties. While this data doesn’t include personal details, it’s always smart to be cautious. Reputable apps prioritize user privacy, and you should look for transparency in how they collect and use your information.

To safeguard your data, follow the National Consumer Law Center’s advice: Review the app’s privacy policy and terms of service to make sure you’re comfortable with how your information is handled. Choosing a trustworthy app ensures you can earn rewards with peace of mind.

Tips for choosing the right cash-back app

With so many cash-back apps on the market, you’ll want to pick the one (or ones) that best suit your needs.

1. Understand your spending habits

Cash-back apps reward consumers in different ways. Some provide coupons or price comparisons to help you get the best deals. Others, like passive cash-back apps, run quietly in the background, tracking purchases and automatically giving you rebates when you shop at partner stores. 

Some apps focus on specific retailers, offering rewards when you shop with them. To get the most savings, consider your shopping habits before choosing an app or extension.

For instance, if you shop online frequently, apps like Rakuten and Honey will offer you the best rewards. If your biggest expenses are groceries and gas, apps like Ibotta and Upside may be more beneficial. Analyze your spending patterns and choose apps that align with where and how you spend your money.

2. Look for variety in retailer partnerships

Some cash-back apps partner with a limited number of stores, while others have broader partnerships. If you want flexibility, choose an app that works with a wide range of retailers or covers specific categories like travel, restaurants or groceries.

For instance, let’s say you’re shopping for groceries, clothes and a new laptop. One cash-back app only partners with a specific grocery chain and a few clothing stores, so you can’t earn rewards on your laptop purchase. Another app, with a broader range of partnerships, gives you cash back for all three categories, no matter where you shop. Choosing an app with more variety means you won’t miss out on savings.

3. Consider payout options and thresholds

Different apps have different minimum thresholds for cashing out. Some apps let you cash out as soon as you’ve earned a small amount, like $5, while others may require you to accumulate $25 or more before you can redeem your rewards. Choose an app with a lower payout threshold if you prefer instant gratification.

4. Weigh the ease of use

An app that’s difficult to navigate or requires multiple steps to earn rewards can be more trouble than it’s worth. Apps like Dosh or Upside are ideal for users who prefer a hands-off approach, as they track purchases automatically once you’ve linked your card. Others, like Ibotta, may require more effort but offer higher rewards in return.

5. Review privacy policies

Before downloading a cash-back app, check for consumer reviews and ensure it’s not linked to scams. Verify the app’s legitimacy and carefully read the privacy policy to understand how their data will be used.

To make sure the cash-back app you choose has a strong reputation for safeguarding user data, look for apps that clearly state how they handle and protect your personal information. Avoid apps that ask for too much unnecessary data or have unclear privacy policies.

How to avoid common cash-back app scams

While cash-back apps can help you save money, they’re also a target for scammers. Protecting yourself from scams starts with knowing the red flags. Here’s how to spot and avoid common traps:

• Beware of emotional pitches: Scammers often use excitement or fear to cloud your judgment. If a deal feels too urgent or too good to be true, take a step back and think it through.
• Watch out for urgency: Claims like “act now or lose your chance” are designed to pressure you. Legitimate offers won’t force you to make snap decisions.
• Question unusual payment requests: Never send gift cards, wire transfers or prepaid credit cards as payment. Scammers use these methods because they’re hard to trace.
• Trust your gut: If something doesn’t add up — like a confusing explanation or a vague promise — it’s likely a scam.
• It’s not a prize if you pay for it: Any “win” that requires you to cover taxes, fees or shipping costs is a scam. Real prizes won’t ask for upfront payments.

If an offer feels off or too good to be true, it probably is. Stay skeptical, do your research and stick to trusted cash-back apps to keep your savings safe.

The bottom line

Cash-back apps offer a way to save money on everyday purchases by giving you a percentage of your spending back. Whether you’re shopping online, buying groceries or filling up your gas tank, these apps can help you earn rewards effortlessly. The key to getting the most out of cash-back apps is to choose the one that best fits your lifestyle and spending habits.

Which cash app you should use depends on where you shop, how often you shop and what kind of rewards you prefer. With the right app, you can enjoy ongoing savings and a smarter approach to managing your personal finances.

As always, review privacy policies and understand the app’s business model to ensure you’re getting the best deal while keeping your data safe.