Cashback and points are a discount with a failure rate

These are listed in the order worth acting on, which with deferred discounts is not the order they are usually presented in.

Why later is worth less

A price reduction at the till is certain, immediate and requires nothing further from you. A cashback payment depends on tracking working, on the purchase not being returned, on a holding period passing and on you claiming correctly.

Each of those steps has a failure rate, and the failures are not distributed randomly since they cluster around unusual purchases. Points add a further uncertainty, because their value is set by the issuer and can be changed after you have earned them. None of this makes deferred rewards worthless, but it does mean face values are not comparable.

Where tracking breaks

Cashback through a third party generally requires an unbroken referral path, which browser settings, ad blockers and app switching can interrupt. Applying a discount code found elsewhere is one of the most common causes of a failed claim, because it can overwrite the referral. Purchases completed later from a saved basket, or by phone, frequently fall outside the tracked path entirely.

Tracked over a quarter, where a claim does fail, the resolution process is usually slow and evidence-based rather than automatic. Keeping a screenshot of the order confirmation is the cheapest insurance available.

Points are a currency somebody else controls

The value of a point is defined by what it can be redeemed for, and that ratio is set by the issuer rather than by any market. Programmes are restructured periodically, and restructuring can change the value of balances people have already accumulated. Expiry rules, minimum redemption thresholds and category restrictions all reduce the effective value below the headline rate.

The number underneath says something else: rules on expiry and on changes to loyalty terms differ by country, and some jurisdictions regulate them more closely than others. Treat a points balance as a stock of something perishable rather than as money in an account.

Doing the comparison honestly

Convert every reward into cash at the rate you would realistically redeem it, not at the best theoretical rate. Then discount that figure for the probability of it arriving, which for third-party cashback is well below certainty.

Tracked over a quarter, compare the result against a straight price difference, and prefer the certain money where the two are close. Where the reward is large enough to survive that haircut, it is genuinely worth pursuing. The arithmetic is simple; the discipline is refusing to value a promise at face.

The behavioural cost

Reward schemes are designed to influence where you shop, which is their entire commercial purpose. A scheme that reliably steers you to a more expensive seller costs more than it returns, even when the rewards themselves are real. Thresholds encourage additional spending to reach a redemption point, which is the mechanism working exactly as designed.

Per unit, the test is whether you would have made the same purchase at the same seller without the scheme. If not, the reward is a rebate on a decision the reward caused.

Using them without being used

Take rewards where they attach to purchases you were making anyway from sellers you had already chosen. Redeem promptly rather than accumulating, because balances are exposed to programme changes and expiry. Keep records of pending claims with dates, since the burden of proof falls on you.

Do not let a pending reward influence a return decision, because keeping something you do not want is the most expensive outcome available. And never treat a reward as part of the price you paid until it has actually arrived.

Everything above, in order of what to do first

1. Why later is worth less. A price reduction at the till is certain, immediate and requires nothing further from you.
2. Where tracking breaks. Cashback through a third party generally requires an unbroken referral path, which browser settings, ad blockers and app switching can interrupt.
3. Points are a currency somebody else controls. The value of a point is defined by what it can be redeemed for, and that ratio is set by the issuer rather than by any market.
4. Doing the comparison honestly. Convert every reward into cash at the rate you would realistically redeem it, not at the best theoretical rate.
5. The behavioural cost. Reward schemes are designed to influence where you shop, which is their entire commercial purpose.
6. Using them without being used. Take rewards where they attach to purchases you were making anyway from sellers you had already chosen.

The takeaway

Value a promise below its face, and prefer certain money at the till whenever the two are close.

Decide what you would pay before you look at what they are asking.