Save money with cash back during the holidays

When the holiday season approaches, smart shoppers look for ways to stretch their budget further. One of the most effective ways to save money during this festive time is with holiday cash back.

Whether shopping for gifts, preparing for family gatherings, or traveling for the season, receiving a percentage of what's spent back in cash can help reduce overall expenses.

This guide explains how to use cash back rewards to maximize savings, which can be especially helpful during one of the busiest retail seasons of the year.

What is cash back?

Simply put, cash back is a type of rewards program that allows shoppers to earn a percentage of their spending back in cash. It's important to understand that the benefits of cash back vs. points are different.

For example, while points might only be redeemable for travel or toward specific products, cash back can be redeemed for cash via check, statement credit, direct deposit into a bank account, or gift card.¹

There are several types of cash back programs available, including:

• Cash back credit or debit cards. Some credit cards, like the PayPal Cashback Mastercard®,² let customers earn a percentage of their purchase back as cash. Some debit cards offer cash back, too. The PayPal Debit Card³ lets shoppers earn 5% cash back on a monthly category of their choice.⁴

• Online shopping portals. These are websites that partner with retailers to offer cash back on purchases made through their links, allowing shoppers to earn rewards when buying online.

• Cash back apps. These apps let shoppers earn cash back on everyday purchases either by linking their debit or credit card online or submitting receipts. The cash back is usually deposited into the shopper's account or redeemed for gift cards.

With PayPal, it’s possible to browse 100s of cash back offers in the app.⁵ By paying with PayPal, especially combined with the PayPal Cashback Mastercard or the PayPal Debit Card, shoppers can earn holiday cash back simply and easily.

How does cash back work?

To understand cash back programs, it helps to know the basic concept: Whenever you spend money, you receive a portion of it back as a percentage of the total purchase. For instance, a card offering 2% cash back would give back $2 for every $100 spent on qualifying purchases.

Different cash back rewards programs may offer varying rates based on the category of spending, the retailer, or seasonal promotions. For example, during the holiday season, some cards may offer higher rates of shopping rewards, such as 6% cash back instead of the usual 2%. Once earned, cash back can be redeemed in various ways, such as direct deposit, statement credit, or check.

Programs like PayPal’s cash back rewards integrate cash back into purchases, making it convenient to earn and redeem for things like travel rewards, electronics, or gifts for recipients on the holiday shopping list.

Maximizing cash back on holiday purchases

The holiday season presents unique opportunities to maximize cash back rewards. By using the right strategies, shoppers can effectively reduce overall costs. These tips are just a few of the ways to maximize cash back on holiday purchases:

• Double rewards. Sometimes, it’s possible to stack rewards. For example, shoppers can combine cash back offers in the PayPal app with the monthly cash back category selected on their PayPal Debit Card. Learn more here.
• Use bonus categories. It can be a good idea to look for temporary bonus categories that offer higher cash back percentages. For instance, some cards may temporarily offer a 6% cash back rate during the holidays, allowing shoppers to maximize their earnings.
• Track spending. Managing spending is essential to avoid making impulse buys that can erode savings. By setting a holiday budget and keeping a close eye on spending, shoppers can maximize their cash back without going overboard with too many purchases.

Cash back rewards can come with numerous other benefits that extend beyond the holiday season and into the rest of the year:

• Cost savings. By providing an opportunity to earn money back on purchases, cash back rewards effectively reduce the overall cost of holiday shopping.
• Budget stretching. Cash back rewards provide a way to stretch the budget further, allowing shoppers to get more for less.
• Flexible savings. Unlike store-specific rewards, cash back rewards often offer flexibility with where and how they can be redeemed, including using them to offset other expenses.
• Additional purchasing power. By earning cash back, shoppers can potentially afford additional gifts or treats that might have otherwise been out of their budget.
• Financial planning. Anticipating cash back on purchases can help with financial planning so that funds can be allocated more effectively.
• Convenience. Many cash back programs are easy to use and may integrate seamlessly with online shopping portals or credit card transactions, simplifying the earnings process.
• Long-term benefits. Some cash back programs offer ongoing benefits, providing rewards that can continue to accumulate throughout the year, such as travel points.

Ways to manage spending with holiday cash back

Managing spending throughout the holidays is important. It’s important to stick to a budget and avoid impulse purchases, no matter how tempting a holiday deal may be. Here are some tips to help:

• Create a budget. A clear holiday budget that takes cash back into account allows shoppers to track spending to ensure they stay within their limits.
• Plan how to use cash back. It can be a good idea to decide ahead of time whether the cash back will be used to buy gifts, pay down debt, save for future purchases, or enjoy a personal treat.
• Don’t limit cash back redemption to just cash. Exploring other rewards options, like travel points or miles, can ensure the cash back aligns better with overall goals and spending habits.
• Avoid mistakes. Common pitfalls include carrying a balance on your cash back card (which can lead to interest charges that outweigh rewards earned) or not reading the fine print on cash back offers, including blackout periods, earning caps, expiration dates, and fees associated with the card.

Keeping these strategies in mind can help shoppers manage holiday spending to get the most out of their cash back rewards.