Instead, try using a side door to discounts, otherwise known as a rebate shopping portal.
Jan. 13 Audio and video cables may be a place to save
Jan. 6 Price protection can put money in your pocket
IN THIS PACKAGE
- Military discipline helps couple build strong financial plan
- Credit scores extend well beyond loans
- One-stop shopping overseas is problematic
- Health accounts pale for retirement savings
- The savings game
- The Leckey file
- Getting started
- Spending smart
- Taking stock
- Express-delivery services gear up for holiday rush
- The week ahead
- Colleges and Universities
See more topics »
When the consumer makes a purchase, the retailer pays the portal a commission. A "rebate" shopping portal goes a step further and shares its commission with the consumer.
Heavy users of online sitescould receive rebates of hundreds of dollars a year, especially if they're buying big-ticket items, such as computers and jewelry.
"It involves an extra click or two," said Becky Ford, who offers in-depth comparisons of rebate portals at her Web site CompareRewards.com. "I don't know why anyone would not take advantage of it. A lot of people just don't understand about the portals."
To use a rebate portal, sign up for free at the portal's site. Then, instead of making a purchase directly at a retailer, go to the portal site to see if it is affiliated with that retailer. If so, note the rebate offered and click the retailer's link to enter the retailer through a side door, of sorts. The item's price is the same, or lower in some cases. And you proceed through the online checkout as you normally would.
Behind the scenes, though, the retailer knows the portal sent you. It pays a commission to the portal. Then the portal shares the commission with you by crediting your portal rebate account. These rebates have nothing to do with the clumsy system of mail-in rebates offered by manufacturers through retail stores. This is all electronic and automatic, and is more akin to a rewards credit card.
For example, if you wanted to buy a $300 KitchenAid mixer at Cooking.com, you could go to a popular rebate Web site such as FatWallet.com. Click on FatWallet's link for Cooking.com. That transports you to the retail site, where you shop as you would normally. But now, you'll get 6 percent of your purchase deposited in cash in your FatWallet account, according to recent rebate rates. Two extra clicks to shop through the portal just earned you $18.
"It's almost like found money because you don't realize you're accumulating that much until you look and there's a significant amount in there," said Kim Sebring of FatWallet.com.
Below are issues to consider when choosing the best rebate portal for you. Next week, we'll provide power-user tips for earning back big money with rebate portals and reducing hassle.
-- Affiliations. Choose a portal that has commission affiliations with retailers you're likely to shop at.
-- Rebate rates. A typical rebate would be about 5 percent, but it can vary widely, even surpassing 10 percent for some retailers. Check a few portals for the highest rebate rates at favorite retailers. CompareRewards.com's Ford recently completed a comparison of 17 portal rewards programs, using rebate rates at 155 merchants. The comparisoncan be found at www.comparerewards.com/shoppingcomparison06.html
-- Payout currency. Different rebate portals provide rebates in cash, points, airline miles, magazine subscriptions, gift certificates and gift cards, savings bonds, Disney Dollars and others. Make sure your payout currency is useful to you.
-- Cash is king. Rebates based on points and other non-cash systems can be confusing, and it's difficult to calculate their true value. Also, portals can change the rules at any time on how much points are worth, potentially making them less valuable. Cash rebates tend to be worth the most and are simplest to understand, Ford said. And cash gives you the most flexibility--you can spend it anywhere.
"My preference is cash-back percentage programs," Ford said. "If you calculate the value of points, you'll realize you're getting a bum deal. I would avoid points programs altogether."
-- Payout details. Check the portal's rules for certain payout details. The first is the delay in crediting your account. For example, some sites might take months to credit your rebate account after the purchase is made, while a few smaller portals take just days.
Second, find the frequency with which payouts are distributed from your account. Cash-rebate sites, for example, might cut checks to its members only once a quarter.
Third, learn the minimum payout before you can liquidate your rebate account. A cash-rebate site might require you to have earned a certain dollar amount before they'll issue a check, while others have no minimums.
And lastly, for cash rebates, check what form your cash comes in. It's usually a check or an electronic transfer to an existing account at PayPal, an online payment system.
-- College savings portals. Several rebate portals are designed to help you save money for kids' college expenses.
Rebate money accrues in an account and can be transferred automatically into a Section 529 college savings account. A 529 account allows you to invest your college savings money and withdraw it for college expenses tax-free. The best-known portal is Upromise; others include BabyMint.com and LittleGrad.com. They will all pay your rebate in cash if you prefer.
-- Other attractions. Portals offer side benefits too. For example, portals might have special prices on items or provide coupon codes for a discount in addition to your rebate. And FatWallet matches 10 percent of whatever you accumulate and gives it to charity. Other sites will give you free points for taking surveys, reading e-mail ads, visiting Web sites, even playing games.
-- Portal recommendations. Pressed into choosing the best three rebate portals overall, Ford chose Ebates.com, Jellyfish.com and QuickRewards.net. FatWallet is also a quality site, consistently ranking high in her ratings, and is especially known for its online forums where users post good deals they've found.
"That's the place to go to find deals," she said.
Gregory Karp is a personal finance writer for The Morning Call, Allentown, Pa., a Tribune Co. newspaper. E-mail him at firstname.lastname@example.org. For additional discussion on spending wisely, see the Spending Smart blog at http://blogs.mcall.com/spendingsmart/.