What’s the difference between online cashback platforms and credit card cashback rewards?

If you start researching cash back rebates online, almost all the materials you find will be exclusively about credit cards. And while many banks offer cash back rebates as a reward alternative to points or free travel miles, they often come with a lot of fine print.

If you are looking for ways to get cashback online, free cashback sites can maximize your cashback rewards without any additional charges. These cashback sites offer rewards whenever you do your regular online shopping through their vendor portal or with a browser plug in. There are no fees, no interest, and no price increases.

What’s the catch with credit card rebates?

There isn’t necessarily a catch when it comes to credit cards – we all know they involve fees and interest, that’s  just how credit cards work.

The main difference is that while credit cards use cash rebates as an incentive for credit card holders to spend more money, the banks also make money from the merchants themselves. When businesses accept payments via credit card they pay a percentage of the transaction as a fee back to the bank. So, most of the time, the bank is making money from both the credit card holder through fees and interest, and from the merchants.

What’s the catch with cashback platforms?

If cashback sites don’t make money through interest and fees like a credit card, how can they afford to offer cashback online free? The simple answer is that these platforms are typically paid by the merchant for every purchase. Many merchants use rebate platforms as a form of advertising. The platform brings them more customers and the merchant offers a small cashback percentage to both the platform and the customer as a reward.

This is great obviously great for the cusomter, because they get cash back, but it’s also great for the merchants, since many people will spend more if they know there is a discount or a reward for doing so.

Essentially, cashback platforms are an innovative online shopping model that benefits everyone involved.

What other differences are there between credit card and cashback rewards programs?

To fully explore all the tiny differences we’d have to examine every single credit card company and every single cashback platform. There are many differences between cashback platforms and banks but the main drawback of credit cards rewards, aside from the fees, is a trend towards cash back thresholds and rebate limits.

Most banks limit the amount of cashback per year a credit card holder can accumulate. Some online platforms do this as well but there are many that don’t. This means that customers can shop as much as they want and gain as many rebates as their spending dictates.

Additionally, credit cards often push their cash back rewards with over-aggressive advertising and an urging toward expenditure. With an online cashback platform, you simply spend as much as you would otherwise. There’s no pressure to spend money on things you otherwise wouldn’t purchase – buy what you want, get some cash back, and that’s all!