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Gift-Shop with Gift Cards and Save (Updated)

From MSN Money.

"Want to save an additional 5% to 50% on holiday shopping deals? Pay for them with discounted gift cards.

Sites such as Cardpool, Plastic Jungle and Gift Card Rescue exist to find new homes for cards from hundreds of retailers. At these sites you can:

* Buy a card at less -- sometimes much less -- than its face value.

* Sell a gift card you don't want for up to 92% of its face value.

* Get an additional 5% if you exchange for an Amazon.com gift card instead of cash.

Discounted gift cards can also be found through eBay, Craigslist and newspaper classified ads.

There's even a price comparison site, Gift Card Granny, that highlights the best deals for both buyers and sellers."

...

"Combine discounted gift cards with other frugal shopping hacks -- online discount codes, price comparison websites, cash-back shopping and rewards credit cards -- and your holiday dollars will stretch a lot further.

But why limit these savings to the silly season?

You can meet some of your own needs this way all year long. Do you go to the movies at Regal, buy clothes at Macy's or fill the tank at Shell? Cards are available at discounts of 20%, 8% and 3%, respectively."

...

"To get the best deals, use the "Buy Gift Cards" button at Gift Card Granny. It will tell you that, in a recent example, Bath & Body Works cards were discounted by 12% at Gift Card Rescue and 20% at Cardpool.

Sometimes eBay auctions yield deep discounts on gift cards, but the price often goes up at the last minute. If you see a card that interests you, put it on your "watch" list but keep checking Gift Card Granny, too, to make sure you aren't paying more than you should. When I checked those Bath & Body Works card prices, eBay auctions were showing discounts as low as 9.9%; buyers could have gotten twice that at Cardpool.

Even better deals are sometimes possible if you buy locally. "You can haggle," says Teri Gault, the founder of The Grocery Game. She once answered a newspaper ad for a $100 Home Depot gift card. The seller wanted $50. When Gault asked for a better price he sold it to her for $30, a 70% discount.

Not everyone can (or wants to) bargain this way. Another potential sticking point on an in-person deal: How do you know the card isn't empty?"

...

"The consumers I interviewed were reluctant to give even "new" discounted cards to friends and family. Some worried the card might not turn out to be legit, even though the sites guarantee balances. Others said it just felt wrong somehow.

What to do if you're squeamish, too? Don't give them, but do shop with them. It's hard to argue with even a 3% discount."

...

"Savvy shoppers combine these cards with other money-saving tricks. Here's how Plastic Jungle devotee Marcy Bursac recently helped her church buy gifts for young parents in need:

* She used a "10% off any Target purchase" coupon from the Entertainment Book.

* She used a free shipping code.

* She ordered through a cash-back shopping site.

* She paid partly in cash and partly with a 3%-off Target gift card that she had bought with a rewards credit card.

"That's how we stack," she says. "Being able to save a few dollars is great."

Note: She got cash back only on the part of the order not covered by the gift card. Some merchants won't give cash back on any purchase in which a gift card is used. Others will. It doesn't hurt to try."

...

"Since it takes three to five business days for the cards to arrive, don't wait too long to place your order -- or to plan your shopping. Marcia Layton Turner is already scanning Black Friday deal sites. Once she's matched the best deals to the people on her gift list, she'll look for discounted cards to match."

...

"There's so many ways to combine a bunch of discounts and get a sweet deal," he says. Knowles predicts that more and more consumers will start keeping cards on hand at all times.

Karen Hoxmeier already does. Her wallet always holds a Kohl's card bought from Gift Card Rescue. A mom to three adolescents, she's constantly scouting for the best deals. Usually that means a 12%-off gift card plus 30%-off coupons that the retailer mails out, applied to clearance items whenever possible.

"It's all about the stacking," says Hoxmeier, who runs the shopping website MyBargainBuddy.

"Times are tight, and I try to get the most for my money. If I can save another 10% to 15% by purchasing a (discounted) gift card, then I'm going to do it."

Cards can be matched to other everyday purchases, too. Pet owners can save 8% to 10% with plastic scrip from PetSmart or Petco. Bursac and her husband buy Exxon cards for the commute and Home Depot cards for do-it-yourself projects.

"It really stretches the dollars beyond anything I can describe," Bursac says.

Gas cards tend to go quickly, so Bursac uses the site's "Wish List" function so she's notified whenever the cards she wants go up for grabs. (Other sites have similar alerts.)"

...

"Tips From the Pros

Most importantly, discounted gift cards are a way to stay within your budget, not to overbuy. If you can't afford to shop, then don't.

Here are a few more things to keep in mind:

* Want to buy? Some cards sell really fast. Set an alert and check your e-mail regularly.

* Want to sell? Rates vary drastically. For example, one site may offer only 70% of a Target card's balance while others will pay 87% to 92%. Use the "Sell Gift Cards" button at Gift Card Granny to find the top price for the ones you have.

* Want to earn more? At least two sites, Cardpool and Plastic Jungle, will tack on an additional 5% if sellers take payment in the form of an Amazon gift card.
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* Use a cash-back frugal hack. If you're buying on eBay, go through a cash-back site and earn up to 3% back.

* Check mailing costs. Gift-card sites mail for free, but some eBay sellers don't. Plenty of eBay cards go for close to their face value -- if you're saving only $4, do you want to pay $2 for shipping?

* Keep your cards handy. They won't do you any good if they're sitting on the dresser when you get to the gas pump, the restaurant or the department store. Keep a few in your wallet.

* Don't like 'em? Dump 'em. If you get cards you don't want this holiday season, sell them immediately and use your earnings to buy what you really do want or need. If you're too busy to sell right away, at least make a list of what you have. Otherwise the cards will languish in the sock drawer, forgotten and unspent."

Reading through the article, it seems these gift cards are somewhat like coupons--they're marketing lures, and you have to "stack" the cards with other maneuvers to really get your best deals ON NEW STUFF. See the underlined portion above to see what kind of hoops you'd have to jump through to get the same bargains you can get just by timing your purchases, haggling, and/or buying used. If you have the time and energy to jump through these hoops, go for it. I don't.

These cards build temporary brand loyalty just like a coupon does. What happens when the cards (or coupons) are gone? Don't forget--retailers learn from their discounting mistakes.

The only way you could get me to join you is if the card was a "universal use" card, like a Visa or Mastercard, putting no restrictions on where I could use it. Couple that with a good deal on eyeglasses, and I'm there--I did this once with a Sears refrigerator rebate gift card, and a free Visa gift card. I used both in the same purchase of 2-for-1 eyeglasses (bifocals with bells & whistles) at Sears, and only ended up paying $100 out of pocket for two pairs of expensive glasses. I imagine I could do better today, but to me it's just not worth the hassle, because I don't need much. The refrigerator also got money back on my taxes.

Cards for car repairs, anyone? How about cards for stuff you can also write off on your taxes, like home office supplies, construction equipment/supplies, company car purchase/lease, home repair/remodel stuff (like new windows and insulation), or SOMETHING MORE USEFUL THAN JUST BUYING STUFF!

Skip the nickels and dimes for BIGGER savings. Stores sales, coupons, clearance racks, and BOGO deals are fleeting, while the tax code is forever (if Congress has anything to say about it).

UPDATE: See my thoughts on Mr. Tightwad's bestowing virtues of gift cards.

Posted by Cute at 7:54 PM

Labels: financial (non-tax)