What is cashback and why shopping with it is so profitable
Today we will tell you how you can save some money when paying for goods and services using bank cards. To return the money spent, it is possible to use the cashback service. Let’s figure out why ordinary customers need cashback and why it is beneficial for the banking sector.
Cashback services are provided in the following forms:
directly by banks for plastic card holders;
online services (for example, cashback in Letyshops);
cashback in online games;
by checks in offline stores; by certain categories of purchases (payment for gasoline at gas stations, utility services).
Cashback (in the original “cash back”) means the return of a part of the purchase price to the buyer’s card at the end of the reporting period. If without complicated explanations, then cashback is a discount on a product that the buyer receives after the purchase.
With the help of the service, you can often return from 1 to 10% of the purchase price. The reporting period for the return of funds under the bonus program in most cases is a month. Discount coupons and bonus points are also used as cashback.
Why are banks so interested in using cashback?
Cashback increases customer loyalty and attracts new ones.
Bonus programs encourage existing bank customers to repeat sales and at the same time increase the interest of potential customers, lure customers of competing banks.
With cashback, customers can and want to spend more.
Refunds motivate to spend money inside the cashback service again and again.
There is a stimulation of the flow of non-cash payments in the monetary system, which allows banks to wrap non-cash payments.
Bank cards are becoming a popular alternative to cash payments, and incoming funds are in constant banking circulation.
Cashback records information about purchases made.
The information obtained allows us to analyze the market.
The demand for goods and services of partner companies of cashback services is increasing.
Shops and establishments included in the cashback service system are more popular with customers.
How cashback works
To understand how cashback works, remember that this is a delayed discount on the purchase of goods. At the same time, it is used to attract customers as one of the advertising methods.
The advantageous position is occupied by both the buyer and the seller, because neither party spends extra money in the transaction:
the buyer saves money;
the seller promotes the product, attracts new customers and increases revenue.
How to choose the right type of cashback and understand the variety of options offered?
At the very beginning, it is necessary to divide the general family expenses into fixed (regular spending on groceries) and variable (large purchases, annual vacation). The ideal option is when it is possible to analyze expenses over a long period (six months or a year) and determine the share of each of the expense items.
Secondly, in the total expenses, it is necessary to single out those that are paid in cash and determine whether they can be paid using a bank card.
At the next stage, try to anticipate big expenses expected in the near future, such as repairs, buying a car, and others.
From the lists obtained, the conclusions are obvious for which types of expenses it would be better to use cashback services. It remains only to choose the appropriate cashback option.
Cashback calculation example
With the simplest cashback option, the bank returns a percentage of the purchase amount to the client.
Consider the case when you can return 1% for all purchases in the reporting period (for example, a year) using a bank card.
When paying with such a card per month, for example, 35,000 rubles, the cashback per month will be 350 rubles, and the annual 350 × 12 = 4200 rubles.
This option for calculating cashback is also possible. For example, a bank card provides for a cashback refund of 3% for paying bills in cafes and restaurants and 1% for paying for pharmacy drugs. In case of spending 7000 rubles. monthly to pay for lunches and dinners in a cafe and 3000 rubles. for the purchase of medicines, we will receive a monthly cashback in the following amount: 7000 x 3% + 3000 x 1% = 210 +30 = 240 rubles. The annual cashback is 240 x 12 = 2880 rubles.
Cashback is a service that helps stores to get new customers, and customers will save money when buying goods in the future. Cashbacks are ubiquitous in various forms, for a variety of purchases. With proper planning, cashback users have the opportunity to save a significant part of their expenses.
To get the effect of using cashback services, you must first determine the monthly volume of purchases, choose the most favorable conditions for cashback and make purchases with pleasure.