If you've never heard of cashback sites, you could be missing out on an excellent way to supplement your income just by buying the things you usually do.

However, cashback websites present a difficult concept to get your head around. Why would companies pay you cashback when you make a purchase? Read on to find out how these sites work and how they can benefit your finances.

How it works

It's quite simple; you sign up to a cashback site (such as Quidco, Cashbackkings or Topcashback) and log in to your newly created account. You then simply purchase the products (i.e. groceries, home insurance etc) as you would normally, but visit the stores via the cashback site and then receive a percentage of it's worth back again!

Why do these sites offer cashback?

You receive a proportion of their referral fee, as the sites themselves are paid by companies for sending customers to buy their products – so they are able to give you some of the revenues from each sale. They take advantage of the way online commercial payments work to give you some benefits.

Cashback credit cards

You can also get up to 5 per cent cashback on credit card purchases, but you must ensure you pay your balance in full each month so this cashback isn't cancelled out by interest charges.

Warning: people who are in debt should not use these cashback sites or credit cards to increase their spending, as this will escalate debt problems in the long run. The best way to use cashback sites is when buying the products you usually do.