Saving with Secondary Market Gift Cards

I thought I'd start with a confession: I'm a shopaholic. More accurately I'm a spendaholic. I love to spend money. What I'm spending it on doesn't matter nearly as much as that I'm spending it. I even love spending money on the new pants I constantly have to buy to replace those with burned pockets :lol:

That's one of the reasons I'm impoverished. Savings and I just don't mix. But I've finally figured out a few ways to save and spend at the same time. The one I enjoy the most is playing the gift card market. With gift cards I get to spend the same money twice! And when I play the gift card market correctly, I get to save twice as well.

Understanding The Gift Card Market-

The first step to succeeding in the gift card market is to understand how gift cards work and what rules surround them-

- According to Bankrate's 2007 Gift Card Study no gift cards for specific stores carry fees any longer. Additionally, only Bloomingdale's and Macy's cards have expiration dates. This may be true for national chains, but you'll want to check on this with local stores or smaller chains. (FYI, gift cards expiration isn't a matter of greed - it's an accounting problem.)

- "Use anywhere" gift cards (Visa, American Express, etc) typically do have monthly fees and/or expiration dates on them.

- Know how your local escheat laws apply to gift cards and gift certificates. Escheat means "A reversion of property to the state in the absence of an individual owner. This usually occurs when a property owner dies intestate, and without heirs." But it also applies to 'abandoned' or 'lost' financial instruments, such as bank accounts, tax refund, and even gift cards. The Incentive Gift Card Council has a brochure explaining each state's escheat laws in simple terms available in this PDF.

- Not all retailers gift cards are usable at the store's online equivalent. Although I was unable to find a chart or list of these shops It shouldn't be too hard to check with the specific stores that you are concerned about.

Getting Into The Gift Card Market-

Obviously before you can start playing the gift card market you need to acquire some gift cards, right? Well, there are several ways to do so - buy gift cards directly from the named retailer, buy them from a gift card retailer (who sells gift cards to numerous stores), buy gift cards online, receive them as a reward (work, contests, online earning opportunities), or even receive them as gifts! However, there are only two ways to build your gift card collection while saving at the same time-

- Receive the cards as a gift or reward at no cost to yourself (obviously), or

- Purchase the gift cards at a discount

I've not been too successful at receiving gift cards as gifts (most people I know are living in poverty as well), and I'll deal with gift cards as rewards in a future post, but today I want to focus on buying discounted gift cards. Once again there are several routes you can take-

- When friends, family, associates, or coworkers complain about gift cards they won't, or can't, use offer to buy them at a discount

- Keep an eye out for special offers for gift card discounts at your local retailers

- Trade small denomination gift cards (or those you got at a discount) for larger ones

- Buy the gift cards below face value online

The first two ways are fairly self explanatory and the third (trading gift cards) is an entire post unto itself, so I'm going to focus on the move I most frequently make - buying gift cards at a discount online. There are many sites dedicate specifically to buying, selling and trading gift cards online, but at least 90% of my gift card purchases are made through eBay. While buying anything on eBay contains slightly more risk than buying at a retail store, I've purchased literally hundreds of gift cards on eBay and haven't been ripped off yet. Just remember the standard precautions when buying at auction and you should be fine. Most important in this case is taking shipping costs into account. You don't want to end up paying $27 for a $25 gift card!

Maximizing Gift Card Market Savings-

Finally, we get to the fun part. How to maximize your savings by using gift cards. When I talk about buying gift cards below face value I'm talking about significant savings. With one exception (discussed in examples, below) I never pay more than 90% of face value for my gift cards. This is my added layer of security. If I do get scammed in an online gift card purchase some day the loss will be minimized by the savings I've received over the years. Typically, though I buy my gift cards at a 15% t o20% discount, with the occasional savings of 25% or more.

The beauty of buying discounted gift cards is that the savings is 100% stackable with in store discounts, coupons, etc! Since gift cards work the same as cash when making your purchases you can still get the savings even if your other discounts are "one coupon per transaction" or something similar. In other words, I've already saved 10% to 25% before I even walk in the door. As I mentioned in the opening paragraph, this also helps curb my shopaholic tendencies because I get to spend the same money twice! Additionally, buying gift cards in advance of large purchases helps me set the money aside.

Examples of Gift Card Savings-

Large purchases-

When I needed to spend $800 (about a week's take home pay) on new tires, I knew I couldn't do it all at once. But paying on credit just ends up costing more in th elong run, and when I set the money aside I'd end up spending it on some "emergency", thus never saving enough to make the purchase. By deciding where I was going to buy my tires (in this case Sears), I was able to buy several discounted Sears gift cards over the period of a couple of months. Since I don't typically shop at Sears this was a defacto savings account. True I wasn't earning interest on the money sitting in the gift cards, but the savings more than made up for it in my case.

Regular Shopping Trips-

As a caregiver I make roughly five trips a week to my local Safeway grocery store (1 for me, two for each of my roommates/clients). Each trip I spend roughly $30 to $75 (my clients grocery money comes out of their budgets but I control all the cash). By regularly buying discounted Safeway gift cards from eBay and combining them with club card savings, manufacturers coupons and Safeway coupons (also purchased from eBay) I typically save around 50% on each of our shopping trips even though my receipt only acknowledges 30%-40%. These are the only gift cards that I will buy for less than a 10% discount from face value. Because of the frequency with which I use them the savings are worth the extra risk.

Special Savings Opportunities-

Until last summer my daughter Z was a regular at the Saturday morning Kid's Club events at Michaels Arts & Crafts Store. As a result we spent tons of money there and I was regularly buying Michaels gift cards to cut the expense (why pay $2 for Kid's Club, when you can pay only $1.50 each week!). We'd stack my gift card savings with their regular %50 off a single item coupons to pay 40% or less on expensive scrapbooking items. When a new Michaels opened near my home in San Jose they had a 50% off your entire purchase coupon in addition to amazing discounts all over the store. I loaded up on discounted gift cards I purchased online and we spent almost $250 in one purchase. However, we took home more than $1,200 worth of stuff! That's an 80% savings on brand new merchandise from a major retailer.

One more thing - don't forget that gift cards do make excellent gifts. Especially when you can get them for well below face value! If you're someone who frequently send small gifts, consider investing in a few $5 or $10 Starbucks gift cards when you see decent discounts on them. Or if you always seem to forget someone on your gift list, a few $25 gift cards (purchased for $20 or less) can fit almost anyone.