Gift Card Exchange. Would you ever turn down a 40% discount on a purchase you are going to make anyway? Hopefully your answer is no. If you answer is yes, stop reading now. I’ve stumbled across many money-saving ideas in the past that I use today. I’ve used gift card exchanges the past few years, mostly to sell gift cards I won’t use for cash. It’s a win-win. I want cash, the website will give me cash, but less than a card’s face value. This past Christmas I started buying gift cards from exchanges as gifts. This too was a win-win. I was able to give more to everyone on my list while still staying under budget. This year I’ve taken gift card buying to a new level. I’m now buying discounted gift cards at a gift card exchange for stores I regularly shop at; Costco, Wal-Mart, Target, and many more.
How Does a Gift Card Exchange Work
A Gift Card Exchange is pretty easy to figure out. gift card exchanges buy gift cards for less than face value, then sell the same gift cards for less than face value. That’s silly, why would an exchange do that? Great question, with a one word answer – Arbitrage. For simplicity sake I’ll use a $100 Victoria’s Secret gift card as the example. I sell this gift card to an exchange at a 25% discount. So, the exchange pays me $75 for a $100 gift card. The exchange then posts my card for sale at an amazing 15% discount. A site visitor can buy a $100 gift card for $85 dollars. The exchange made $10 as the transaction middleman. Take this business model to scale and you have sites like Card Pool. Card Pool buys and sells thousands of cards a day and earns the difference between seller and buyer transactions. A simplified description of exchanges is that they run similarly to credit card companies; charging transaction or convenience fees. The beauty of this business model is that it’s a triple win; the seller is happy because they wanted cash, the buyer is jacked because they saved 15% before ever walking into the store, and the exchange is counting it’s profit.
The image below shows the seller offer page at Card Pool. In this example I am selling a $25 Cheesecake Factory card. The site made me two offers. I was offered $18.25 or $17.00 for my card. The difference in price is determined by my choice to either mail my card to the company or do an instant online transfer.
On the buy side I can purchase Cheesecake Factory $25 gift cards for $20.62, which is a $17.5% discount. Card Pool will make between $2.37 and $3.62 on this single transaction.
A Gift Card Exchange sells gift card for stores people actually shop at. There are thousands of stores to choose from. Some places I didn’t even know where in business anymore. Anyone remember this place 🙂
Aside from the random shops, like Bob’s Big Boy, exchanges have cards from most retailers you see at shopping malls or commercial grocery centers. The screenshot below from Raise.com is a good example of the cards available for purchase.
Are Gift Card Exchanges Legit
The Internet is full of scams, so buyer beware. Having said that, I’ve used several exchanges without issue. There are a lot of gift card exchanges online and tons of affiliates attempting to drive traffic to exchanges for a small commission. Full disclosure – I’m not an affiliate. I’m just sharing one way I like to save money. There are no affiliate links on this blog post. For your safety, I say stick to the big exchanges and read online reviews of smaller exchanges before buying or selling.
I’m Hooked – Where Can I Find A Gift Card Exchange
I knew you couldn’t resist. The fastest way to find gift card exchanges is to Google “Gift Card Exchange” or a similar term. Or just visit one of the sites I’ve listed below. All five sites have been tested by me. Card Pool and Raise are the two exchanges I use most often, the other two I use occasionally.
Gift Card Granny is a site that aggregates deals from exchanges and presents them in one place. This site is an affiliate site, so any click drives to another site where the deal is offered. I usually visit this site to get an idea of where the best deals are for the store I’m interested in; then enter that site through their link so the site can collect a bounty on anything I buy. The image below shows a typical Gift Card Granny store landing page. Under the seller tab, you can see which vendor is selling Cabela’s gift cards at the best discount.
What’s the Downside of a Gift Card Exchange
In my opinion, there’s not much downside to the gift card exchange model. As a seller, you must give up a percentage of your card face value to trade it for cash. But, if you own gift cards you will never use, selling for cash at a discount makes perfect sense. As a buyer, there’s mostly upside. You can buy gift cards at a discount. In some cases discounts are very high. For example, this past Christmas I bought a $500 Victoria’s Secret gift card for $325 on Raise.com. I saved 35%. I then bought $200 worth of merchandise for my wife, and I gave her the remaining $300 gift card. In other cases, discounts are a few percentage points. My opinion is that any discount on something I’m going to buy anyway is a good deal. Would you turn down a 5% discount on the purchase price of IBM or Apple stock? Heck no you wouldn’t.
Most exchanges offer free shipping for physical cards and instant transfers of virtual cards or online cards. You should only buy from a site with free shipping, otherwise your discount will quickly get swallowed up by shipping charges.
The only other drawback is the type of card you receive. For me this is a big deal. In the Victoria’s Secret example, I could have saved 38% if I selected an electronic gift card. However, I really wanted a physical card just like the ones I can buy at a store. I paid a little more for this option. As a buyer you need to be aware of the type of card being sold. Some cards are physical, virtual, online shopping only, etc. So, be sure you know what you are buying.
Simple Steps I Use To Increase My ROI
I’ve started buying exchange gift cards for most of my everyday purchases. For example, every month I buy a $50 gas card, $100 Wal-Mart card, $50 Target card, and a $200 Costco Card. I’m going to spend money at these stores anyway so why not take the discount. The average savings I see on cards like these are between 1% and 5%. The discount is low because these stores are in high demand. Insane deals from 20% to 40% typically are for restaurants and clothing stores.
This past Christmas, I bought $1,500 in gift cards. I spent $900 to get $1,500. This represents a 40% discount on items I was going to buy anyway! Wait it gets better. I bought all of my gift cards with a credit card. Every purchase I make adds to my credit cards points. I’m saving 40% and taking advantage of credit card perks; which increases my overall discount. I’m a huge fan of credit card points. I pay every bill I can on credit cards, then payoff my cards each month.
Another way I increase my ROI is by taking advantage of timely sales. I bought a $300 Nordstrom’s gift card for $225 – an instant 25% savings. I then waited until Nordstrom’s semi-annual sale. I bought dress shirts for 50% off regular prices and I used my gift card that I saved 25% on. Trust me, when timed correctly the savings really add up.
Gift Card Exchange Takeaway
I read so much about side hustles. It seems like every blogger out there is hustling to make a few extra bucks. Buying gift cards will save me a bunch of money; enough that my side hustle can be sitting on the couch drinking beer :-). I see a gift card exchange as an easy way to save money. Every penny saved is future money for investing. When used wisely a buyer can get discounts on items they’re going to buy anyway. Gasoline, groceries, staple items; these are all perfect card types to buy from gift card exchanges. Why not buy discounted cards before going to a store you’re going to shop at anyway. I estimate that I will save close to $2,000 in 2016 by buying discounted gift cards. This is a ton of money. $2,000 will buy 55 shares of AT&T stock. 55 shares that I might not buy if I don’t take advantage of gift card discounts. AT&T pays a hefty 5.24% annual yield. If I choose to use my $2k in savings to by AT&T stock, I will make an extra $105 a year in dividends. I save money, invest the difference, and make more money. IT’S ALMOST FREE MONEY!
Do you buy discounted gift cards? Have you ever used a Gift Card Exchange?