Cashback sounds great until you do the math. Spending $1,000 to get $20 back isn't "earning money." It's a discount disguised as a reward.
You know the routine. Download the app, activate the offer, shop through the link, wait weeks, get 2-5% back. After months of this, most people realize an uncomfortable truth: they're not earning anything. They're getting a fraction of money they already spent.
It's not that cashback apps are scams. Rakuten, Ibotta, Fetch, they all work and pay out. The problem is the model itself. It was designed to benefit stores and platforms first, you last. And the more you understand how it works behind the scenes, the clearer it becomes why a new generation of apps is abandoning this model entirely.
Tired of Spending to Earn?
Discover apps that pay for your attention, not your money.
Quick video. Earn your first reward.
How Cashback Really Works
Before criticizing, it's important to understand the mechanics. Cashback apps don't take money from their own pockets to give you. They're intermediaries who receive commissions from stores for bringing customers.
The Money Flow
When you click a link from Rakuten and buy something at Macy's, here's what happens: Macy's pays Rakuten a commission of 5-15% on your purchase. Rakuten keeps most of that commission (usually 60-80%) and gives you the rest as "cashback." On a $500 purchase with 10% commission to Rakuten, the platform receives $50, keeps $35-40, and gives you $10-15.
You spent $500. You received $15. The store made a sale. The app profited $35. Everyone won, but you won the least, proportionally, despite contributing 100% of the money.
Why Stores Pay Commission
Stores pay because cashback apps function as customer acquisition channels. It's cheaper to pay 10% commission to Rakuten than to spend on Google or Instagram ads. For the store, it's a marketing cost with guaranteed ROI since they only pay when there's a sale.
This explains why cashback rates vary so much. Stores with high margins (fashion, electronics) can offer 5-15%. Grocery stores with tight margins offer 0.5-2%. And why do some "special" offers of 20-30% appear? Because the store is desperate to clear inventory or wants to attract new customers.
The 5 Problems Nobody Talks About
Cashback apps aren't scams. Rakuten has an A+ rating with the BBB. Ibotta has paid out over $1.5 billion to users. They work. But they work within a model that has structural flaws affecting you.
Problem #1: You Need to Spend to Earn
This is the fundamental flaw. Cashback only exists if you spend money first. "Getting 5% back" means you still spent 95%. If your goal is to save money or earn extra income, being incentivized to spend more is counterproductive.
Newer location reward apps and attention economy platforms have eliminated this requirement. You earn without spending.
Problem #2: The Rates Are Too Low
Average cashback in the US sits between 1-5%. Let's do the math: to accumulate $100 in cashback at an average 3% rate, you need to spend $3,333. That's months of shopping for a modest return.
Rakuten offers 1-10% depending on the store. Ibotta averages $0.25-$5 per qualifying item. Fetch gives 25-50 points per receipt (roughly $0.03-$0.05). Capital One Shopping offers 1-10% at select retailers. None of these numbers are life-changing.
Problem #3: Minimum Thresholds Lock Your Money
Rakuten requires $5 minimum to cash out. Sounds low, but with 2-3% average cashback, you need to spend $170-250 to get there. Ibotta requires $20 minimum. That's $400-1,000 in spending. Meanwhile, your money sits in their platform, earning nothing for you.
Worse: many apps have expiration periods. If you don't cash out within 12-24 months, you lose your balance. You're giving the app an interest-free loan and risking losing everything.
Problem #4: Pending Cashback That Never Arrives
One of the most common complaints about cashback apps: "pending cashback for months." The process works like this: you buy something, the cashback stays "pending" for 30-90 days while the store confirms you didn't return the product. Only then does it become "available."
In theory, this makes sense. In practice, many purchases simply aren't confirmed. The store doesn't report, the tracking fails, or some technical error happens. You made the purchase, the app received its commission, but your cashback disappears into limbo.
Problem #5: It Encourages Bad Financial Behavior
"Get 20% cashback!" sounds like an incredible offer. But you're still spending 80% on something you might not need. The most "profitable" users for cashback apps are people who buy unnecessary things just to "take advantage of the offer."
If you weren't going to buy that product anyway, the cashback isn't savings. It's spending disguised as earning.
The Math That Doesn't Add Up
Let's simulate a real cashback user in the United States.
Scenario: Dedicated User
Sarah spends $800/month on purchases that qualify for cashback: groceries, pharmacy, online shopping. She uses Rakuten and Ibotta religiously, activates offers, scans receipts, does everything right. Average cashback rate: 3%.
Monthly result: $24 in cashback. Annual result: $288.
Now let's count the time. Sarah spends ~30 minutes per week managing cashback: checking offers, activating deals, scanning receipts, verifying that cashback posted. That's 26 hours per year.
Value per hour of her work: $11.07.
And she needed to spend $9,600 to get there.
| Metric | Traditional Cashback | No-Purchase Apps |
|---|---|---|
| Spending required | $9,600/year | $0 |
| Annual return | $288 | $300-600* |
| Time invested | 26 hours/year | ~26 hours/year |
| Value per hour | $11.07 | $11.50-23.00 |
| Actual net profit | -$9,312 (spent to earn) | +$300-600 (pure profit) |
*Based on combination of location, attention, and passive reward apps.
The math doesn't lie. With traditional cashback, Sarah "earned" $288 but spent $9,600 to do it. With passive income apps and no-purchase rewards, the same time generates real profit without requiring spending.
Who Really Profits from Cashback
Following the money, it becomes clear who the real beneficiaries of this model are.
The Store
Makes a guaranteed sale. Pays commission only when they sell. Gets your purchase data for future marketing. Predictable and controlled acquisition cost. Verdict: big winner.
The Cashback Platform
Rakuten generated $3.6 billion in revenue in 2023. Receives commission from thousands of daily transactions. Keeps 60-80% of the value before passing it to users. Has your money sitting in their account for months. Verdict: big winner.
You
Spend money to receive a fraction back. Dedicate time managing offers and apps. Risk pending cashback never posting. May be incentivized to buy unnecessary things. Verdict: smallest beneficiary, despite contributing 100% of the capital.
What's Replacing Cashback
A new generation of apps is inverting the logic. Instead of paying you to spend, they pay for your attention, presence, and data. Zero purchase requirement.
Location-Based Rewards
Apps like VISU pay you for visiting places. Walk into a store, scan a QR code, earn. No purchase required. The business pays for foot traffic data, you receive a share of that value.
Unlike cashback where you spend $500 to earn $15, here you earn $2-10 per visit without spending anything. Four visits per week can yield $30-160/month in pure profit.
Attention Economy
Brands spend billions on ads trying to capture your attention. Attention economy apps cut out the middleman and pay you directly. Instead of Facebook getting paid to show you ads, you get paid to engage with brands.
The model makes sense: a brand pays $10-20 to acquire a customer through ads. If they pay you $2-5 directly to engage, they spend less and you earn for your time.
Passive Rewards
Walking apps like Sweatcoin pay ~$0.05-0.10 per 1,000 steps. Data apps like Honeygain pay $20-50/month for sharing unused bandwidth. Receipt apps pay for any receipt, not just specific purchases.
None require you to spend money. All generate real profit.
Switch to Real Rewards
Earn for your attention and presence, not your spending.
Quick video. Earn your first reward.
When Cashback Is Still Worth It
Cashback isn't useless. There's one scenario where it makes sense: purchases you would make anyway.
Situations Where Cashback Works
If you were already going to buy a $3,000 laptop and there's 5% cashback available, that's $150 free. If you grocery shop every week and can scan receipts for 2% back, why not? If you're traveling and have cashback on flights, activate the offer.
The rule is simple: never buy something just for the cashback. If the product wasn't worth it without the cashback, it's not worth it with the cashback.
The Smart Combination
The most profitable approach is combining methods. Use cashback on planned purchases you would make anyway. And use no-purchase apps to generate real extra income.
Example: you're going to the mall. With VISU, you earn for being there ($2-5). You buy something you needed with Rakuten cashback (3% back). You scan the receipt with a receipt app (a few more dollars). One mall trip generates three income streams.
Want to understand better how to earn without buying? See our complete guide on cashback without spending.
Combine Strategies and Earn More
VISU pays for location. No purchases. Real profit.
Quick video. Earn your first reward.
FAQ — The Problem with Cashback Apps
Are cashback apps scams?
No. Apps like Rakuten (A+ BBB rating), Ibotta (over $1.5 billion paid out), and Fetch work and pay. The problem isn't fraud. It's that the model was designed to benefit stores and platforms more than you. You spend $1,000 to receive $30. It works, but it's not the best deal for you.
How much can I earn with cashback per month?
Depends on how much you spend. With $800/month in spending and a 3% average rate, you earn ~$24/month. Very active users report $50-100/month, but that requires spending $2,000-4,000 monthly. The "earnings" are proportional to spending, which is the central problem of the model.
Why does my cashback stay pending for so long?
Apps wait for the store to confirm you didn't return the product. This process takes 30-90 days. Sometimes longer. If the store doesn't report or there's a technical error, the cashback may never be released. It's one of the most common complaints about cashback apps.
What's the best cashback app?
For traditional cashback, Rakuten has the most retail partners, Ibotta is best for groceries, and Capital One Shopping works well for online purchases. But if you want to maximize earnings, combine cashback with apps that pay without requiring purchases.
Are there apps that pay without needing to buy anything?
Yes. Location apps pay for store visits. Attention apps pay for brand engagement. Walking apps pay for steps. Receipt apps accept any receipt. VISU combines several of these methods. None require spending. Check our guide on cashback without buying.
Should I stop using cashback apps?
Not necessarily. Use cashback on purchases you would make anyway. Don't buy anything just for the cashback. And supplement with apps that generate income without requiring spending. This way you get the best of both worlds: optimize necessary purchases and generate real profit in parallel.