[Edited 2019/09/02 to link to a DoC article about a reduction in credit card benefits]
I save a bunch of money by buying gift cards at a discount and using those instead. Walmart? I pay with a gift card. Target? Gift card. Amazon, Kroger, Chipotle, eBay, H&M, and Five Guys? I pay with gift cards, not credit, debit, or cash.
To give you an idea of how much you can save, I bought those cards at the following discounts
- Walmart - 16.67%
- Redeem points for gift cards from my PayPal credit card. Discount is compared to redeeming the points for cash
- Discount from Raise is 1-3%
- Target - 10%
- Every year, Target has a sale sometime during the holiday season for 10% off their gift cards
- Amazon - 20%
- Amex offers mostly. Amex offers are discounts available for your Amex card. The offers are random and are structure like spend $50 or more at Lowe's and get $10 back. So I went to Lowe's and buy a $50 Amazon gift card
- Kroger - 3%
- Chipotle - 20%
- Amex offers, Office Depot
- eBay - 16.67%
- PayPal credit card points redemption
- Discount from Raise is 1-3%
- H&M - 33%
- Kroger sale
- Five Guys - 20%
- Amex offer
Where Can You Find Discounted Gift Cards?
New Gift Cards
The following places will periodically have sales on new gift cards
- Only paypal_digital_gifts and svmgiftcards are sellers of brand new gift cards
- I do not recommend buying gift cards from any other sellers on eBay
- Office Depot
- Samsung Pay
- This is a mobile payment app (like Android or Apple pay) but in it is a store where they sell gift cards
- You must have a supported Samsung phone - a S series phone that is S6 or later (including variants such as the S6 Active), or the Galaxy Note 5, 8, or 9
- You can only buy 2 gift cards per day per phone
- Sam's Club
- Kroger and its numerous subsidiaries
- Safeway and its subsidiaries
- They only have a few gift card brands that go on sale - most commonly Domino's, Nike, and Regal Cinemas, with a couple other brands here and there
All these stores advertise their gift card sales in their weekly ads.
Sam's Club and Costco actually have gift cards on sale all the time, but they periodically have sales on some brands at better rates.
Used Gift Cards
This may sound scary, but I've bought plenty of used gift cards without issue (and was quickly refunded for the ones that I did have problems with).
There are people that will sell their gift cards. Some people are selling cards they've partially used. Others are selling completely new cards that they either don't know what to do with, or purposely bought for the purpose of resale. Regardless, there's both a supply and demand of used gift cards.
One important thing to understand about used gift cards is that there is no systematic way to prevent the seller of the gift card from using the gift card after they've sold it. The seller could save the gift card number and use it for an online purchase.
How gift card reselling websites deal with this issue is to demand that sellers not do that, require credit card information before sellers can sell any cards, charge sellers for the lost value if they use cards they've sold, and ban sellers if this happens too often.
Any reputable gift card reselling site will guarantee the value of the gift card for a period of time after purchase. That is, if your gift card's value is not correct and you report it during this time, they will refund you. Only buy a used gift card if you intend to use it within this guarantee window.
Do not ever gift someone a used gift card unless you want to explain to them the caveats of used gift cards.
Don't wash the gift card and gift it either. A friend of mine did that with Starbucks gift cards. The original used Starbucks gift cards were actually bought by the seller with a stolen credit card, and Starbucks eventually invalidated my friend's cards by tracing the transactions.
This may sound like a lot of hassle for a discount. However, you can't always find new gift cards on sale for the brand you want. Also, depending on the brand, the discount could be large. Generally speaking, the more niche the brand, the larger the discount (like how I've gotten H&M gift cards at a 33% discount, but Kroger at only 3%).
The site Gift Card Wiki will compare the different rates on used gift cards across the different reselling sites. I have bought from several of the sites on Gift Card Wiki - including ABC Gift Cards, Card Kangaroo, Raise (referral link - thank you for supporting my blog!), Gift Card Bin, and eSaving, all without issue. Raise has the longest guarantee window in the industry at 1 year.
So in summary,
- Don't ever buy a used gift card unless you intend to use it within the guarantee window
- Understand your gift card might randomly lose value. If this happens, contact the reselling site and get refunded
- Don't gift used gift cards
- Don't wash used gift cards
But You Give Up Credit Card Benefits
Credit cards often have the following benefits that you will give up if you use a gift card instead.
- Damage & Theft Purchase Protection
- Credit cards will often refund you up to a limit (ballpark $10,000 per claim) if an item you purchased with your credit card is damaged or stolen within 60-90 days
- Price Drop Protection
- Credit cards will often refund you up to a limit (ballpark $200 per claim) if the price of your purchased item drops within 60-90 days of the purchase date
- Extended Warranty
- Credit cards will often extend the manufacturer's warranty for 12 months (Citi is an exception at 24 months for some of their cards)
- Return Protection
- Credit cards will often refund you up to a limit (ballpark $300) if you attempt to return your purchased item within 60-90 days and the merchant refuses to accept the return.
These benefits are essentially insurance. However, unlike actual insurance where the premiums are priced so that on average you'll pay more than you benefit, the price of this insurance (the discount rate of the gift card) has absolutely nothing to do with the benefits of the insurance. There's no obvious answer to the question of what gift card discount do I need to make it worth forgoing these credit card benefits?
Note: As of 2019/09/02, Citi has removed a fair number of their credit card benefits, including 90 day return protection.
What If You Use a Gift Card and a Credit Card?
This depends on the credit card you use. Some cards won't offer any coverage. Some cards will only cover the portion charged to the credit card.
Citi offers coverage for all four of the above benefits even if you do not pay for the item in full with your Citi credit card. In their PDF of credit card benefits, each of the four benefits listed above has
The amount charged to the Citi Card (including ThankYou Points)
in the "Maximum Coverage per Incident" section.
Additionally, Citi is the only bank that I know of that offers two years of extended warranty as opposed to the standard one year on some of their cards. This is why I prefer Citi for purchases where I want an extended warranty.
If your card will pay out for these benefits even if you use a gift card to pay for part of the purchase, then we have our middle ground. For example, I bought a $950 camera (Sony RX 100 IV -
I'll be putting up some shots from this camera sometime photos can be found here), and paid for $300 of it with discounted gift cards, and the rest with a credit card. This way I can get reimbursed for $650 of the purchase if I ever end up filing a warranty claim.
I resell gift cards. Cue joke about money laundering ↩︎
This may actually have been a money laundering scheme ↩︎
Assuming the insurance company has all the necessary information to make the correct estimate of your odds of filing claims and the amounts of said claims ↩︎