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Your support makes all the difference.We all know about cashback sites. The deal is that we hand over our personal details and associated data in return for a truly paltry financial “reward” that may not be paid anyway.
Most of the time we question the value of it all. On many purchases you’ll earn just pennies or a couple of pounds.
But there are some categories where the potential rewards are much higher – and ISAs are one of them.
Savers can get a cash boost of up to £300 when they open a new ISA – and it all it takes is a few extra clicks of a mouse.
If you’re looking for a home for this tax year’s £20,000 allowance, you can boost your balance by opening your account using a cashback shopping site.
Cashback sites take advantage of the way affiliate links and commercial payments from one website to another work. To get involved you need to register for an account with Topcashback or Quidco – by far the biggest cashback sites – then search for either a product type or retailer.
When you want to buy something, follow the tracked link to the retailer and how much you spend will be monitored. You’ll receive either a cash amount or a percentage of how much you’ve spent as cashback, providing any terms and conditions have been met.
Quidco spokesperson Hannah Byrne says: “We know that ISAs are one of the most effective ways for individuals to save money. Generally offering higher interest rates than traditional savings accounts, they provide savers with a flexible and rewarding savings solution.
“But purchasing through a cashback site, such as Quidco, offers savers the added bonus of receiving cashback simply for taking out an ISA. With numerous deals to suit all budgets and savers’ needs, opening an ISA via a cashback site is one of the best ways to boost a savings balance.”
How much cashback is on offer for opening a new ISA varies greatly and changes regularly. At the time of writing you could get up to £300 by opening a Scottish Friendly or Shepherds Friendly stocks and shares ISA using Topcashback.
Rival Quidco also offers up to £300 for opening a Shepherds Friendly stocks and shares ISA, as well as up to £225 with Foresters Friendly Society, and up to £200 if you open Ratesetter’s innovative finance ISA.
The three-figure sums on offer might sound great but the words “up to” shouldn’t be ignored. In general, the maximum amount of cashback is only available if you invest a hefty lump sum or commit to a substantial monthly premium.
For example, to get £300 from Shepherd’s Friendly you need to commit to a monthly premium of £1,000 on Topcashback, or invest your entire £20,000 annual ISA allowance when you open an account via Quidco.
“Each ISA works differently, so it’s important to read the terms and conditions carefully before committing. However as a general rule, when setting up an ISA through a cashback site, you will need to commit to a certain period of investment, or invest at least the amount of cashback before receiving the cashback benefit,” says Byrne.
While the big cashback sums are reserved for investors with significant sums of money to invest, more cash-strapped savers can double their money – or more – within a few months. For example, if you open a Foresters Friendly Society Junior ISA using Topcashback, you need to make three monthly contributions of at least £10 (so a total of £30) to earn £42 in cashback.
Alternatively, if you open a Scottish Friendly investment ISA via Quidco, you can earn £180 in cashback once your contributions match this figure.
These rules mean you could theoretically game the system by depositing the necessary funds in an ISA, earning the cashback, then withdrawing the money, and investing it elsewhere. However, bear in mind you can only pay into one stocks and shares ISA each tax year.
TopCashback UK director Adam Bullock says: “There are a few things you should consider before opening an ISA. Firstly, be sure to check you are meeting the requirements to earn cashback. Cashback deals are often for new customers, so make sure you do not have an ISA with the provider you choose.
“Similarly, the terms and conditions are slightly different for each ISA provider. However, most will have a minimum amount of money which must be invested over a set amount of time to qualify for cashback. Ensuring all of those criteria have been met, cashback is usually paid within 90 to 120 days of opening and investing in an ISA.”
Before you jump in and open a new ISA, bear in mind that advertised cashback is not 100 per cent guaranteed. On some occasions, affiliate links fail or the retailer doesn’t pay the cashback site. If this happens you’ll have to take it up with the cashback site concerned, but consumers have few rights in this area.
It’s also important to consider whether the ISA you’re about to open is the right one for your investment goals and attitude to risk.
“You need to be very wary about using cashback sites to buy financial products. First and foremost you need to make sure that any products you buy are the most suitable ones for you,” warns Patrick Connolly, chartered financial planner at Chase De Vere. “Cashback sites tend to offer a very limited range of products and some of these will have high charges and poor performance records. If you make the wrong choice, these negative points will far outweigh any cashback benefits.”
Savers can put up to £20,000 into an ISA, or split between various ISAs, each year. You can choose between cash, stocks and shares, innovative finance, Help To Buy and Lifetime ISAs. In all cases, interest and returns are paid tax-free.
Most cashback deals are for stocks and shares or innovative finance ISAs, not cash ISAS. Stocks and shares ISAs potentially put your capital at risk. Experts generally advise having cash savings equivalent to about six months’ of your salary before dabbling in the stock market or peer-to-peer lending.
If you’re between the ages of 18 and 40 and plan to buy a home at some point, you’d be better off opening a Lifetime ISA rather than a mainstream stocks and shares ISA – even if it offers cashback. A Lifetime ISA offers a 25 per cent bonus from the government on contributions up to £4,000 a year.
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