Wow! Three percent cash back at Target, plus a 10 percent off coupon? Let me check the rest of my apps to see if any of those can do better!
This was my normal Sunday-morning inner monologue. I spent my weekends obsessively going through my favorite cash-back apps and sites in the hope of scoring the best deals. Ibotta, Checkout 51, Ebates, Fetch Rewards, and more — I had them all. I prided myself in knowing who was offering what major discount at any given time.
In the six months of my obsession, I managed to rack up nearly $400 in cash-back rewards. How could I feel horrible about that? That money paid off my kid’s holiday shopping wish list months early and allowed me to liquidate a small tuition bill.
But this is not a story with a happy ending. I didn’t save a fortune or become some expert extreme couponer that you see on TV. In fact, I ended up with a credit card balance that was greater than when I began and an addiction that I didn’t know how to quit.
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The Benefits of Cash-Back Apps
Coupons have been around since the late 19th century, the first being for a free drink of a new product called Coca-Cola. Today, over a billion vouchers are redeemed each year, according to the research group Inmar. And with droves of shoppers going online, more and more businesses are using technology to eliminate abandoned virtual shopping carts and incentivize shopping with programs like email sign-up bonuses or promo codes for finishing purchases.
And for the most part, we consumers are getting a lot out of it. For one, coupons make us happier than if we didn’t have them. We tend to stress less when we’ve got discounts to use or a free item to redeem. That’s because coupons or the sense of receiving a discount help release oxytocin, a hormone associated with joy, according to a study by Claremont Graduate University in California.
The cash-back apps provided instant gratification, great deals, and money in my pocket. So where did I go wrong? How did I end up spending more than I saved?
The Dangers of Cash-Back Apps
According to Psychology Today, I fell for a few simple tricks those Coca-Cola advertisers knew more than 100 years ago. First and foremost, I stopped checking the price. I grabbed the item on my list that I knew was on sale and avoided comparing the discounted price with that of generic versions or my usual brand; and the latter options were almost always cheaper even with money coming back. Coupons and discounts also meant I went to more expensive stores instead of my discount grocers.
Then I bought items I didn’t need. Even though I only drink water at home, there was a week when I bought five bottles of ice tea because I got them for 50 cents each. While just $2.50, that was still a purchase I wouldn’t have made before I started using cash-back apps.
It was also easy for me to fall into the trap of instant gratification and gamification. Seeing my “rewards” made me want to shop more and more. Level-up bonuses and frequent emails with secret discounts drove me deeper into addiction mode.
Even when I blocked the emails and allowed myself only one shopping day, I still played the cash-back game to win.
Soon, my weekly grocery-shopping bill for a family of three went from $70 to $80 to $120 to $140. Other areas — such as my clothing, entertainment, and gift-giving budgets — increased substantially, as well. While I made $400 in those six months, I overspent by $600 during that time, resulting in a net loss of $200.
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The Bottom Line on Cash-Back Apps
You’re probably wondering if I’m going to call for some outright ban on cash-back apps or if I cut myself off cold turkey. The answer is no. In my heart, I’ll always be like my grandma, clipping coupons and scoring bomb deals when I can. Cash-back apps do have a purpose, but it only works if there’s some level of control.
My new main rule is not to use cash-back apps to determine what and when I buy. I look at the apps before and after I shop, but never while I’m in the store. For online cash-back incentives, I use them as a tool, not an excuse to go virtual window-shopping. I continue to block all those daily email reminders and remove myself from subscription lists.
While getting cash-back rewards can be gratifying and good for your wallet, there are some significant downsides if you’re not careful. Don’t fall for the couponing game, which you can’t win; and don't let companies play you and your finances.