Internet offers side door to discounts

Your Money

December 03, 2006|By Gregory Karp | Gregory Karp,Morning Call

If you'll be holiday shopping online this year -- and there are many good reasons to -- make sure you enter online stores through the right door. And the right door is not the retailer's front Web page.

Instead, try using a side door to discounts, otherwise known as a rebate shopping portal.

A shopping portal, or entrance, is a separate free Web site that has an arrangement with retailers. Retailers pay a commission to portal operators in return for sending Internet consumer traffic to the retailer's site -- a kind of referral fee. 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 sites could 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 "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, you could go to a popular rebate Web site such as Click on FatWallet's link for 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

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.'s Ford recently completed a comparison of 17 portal rewards programs, using rebate rates at 155 merchants. The comparison can be found at

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.

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.

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