Santa's bag gets lighter every year as more people
request gift cards. In fact, gift cards have become so popular that a
secondary market is booming. While you probably wouldn't give Mom a used
sweater for the holidays, you might be able to save money by buying other
people's unwanted gift cards at a discount.
A good first stop is GiftCardGranny.com, an aggregator site
that buys and sells gift cards and lists deals from more than a dozen gift card
discount sites. At press time, GiftCardGranny listed more than 36,000 gift
cards for sale from 538 different merchants at an average discount of 13.7
percent. Shipping is almost always free and if you don't see a card you want, many
sites offer email alerts to let you know as soon as that card becomes
The cost of a secondhand card depends a lot on how popular it
is. During the holidays, many shoppers are looking for gift cards from toy retailers
such as Toys R Us, says Shelley Hunter, content
manager, spokeswoman and "gift card girlfriend" for GiftCards.com.
Other big sellers are cards that can be used for a wide variety of merchandise
-- those from retailers such as Target, Wal-Mart and JC Penney, Hunter says.
No surprise, the popular cards usually carry the smallest
discounts. A recent spot check of deals listed on GiftCardGranny.com showed Wal-Mart
cards discounted 2.6 percent, Target cards marked down 3.9 percent, Toys R Us going
for 5.4 percent off and JC Penney cards discounted 12.1 percent.
At the same time, Petco gift cards were going for 16.3
percent off and Cold Stone Creamery for 23.1 percent off. "The best discounts can
be found on cards that maybe aren't as widely popular, such as restaurants,
service providers and select clothing retailers," says Luke Knowles, CEO of GiftCardGranny.com.
If you want a popular card, is it really worth the hassle to save
only 5 percent or 6 percent? Yes, says Knowles, noting
that savvy shoppers stack the discounts with coupons and sales. "We believe
paying less than face value for anything is a good thing."
Read on for more tips on buying and using discounted gift
using vs. gifting
Think twice about giving the discount gift cards themselves to
people. They may not make the best gifts. "Some do look like they've been
sitting in a wallet," Hunter says. "The card is still good, but it's not
Another issue is the card value -- most people give new gift
cards in round dollar amounts such as $10, $25, $50. On the swap sites, you may
see cards with odd dollar amounts such as $19.22 or $86.55.
"If you got a gift card from someone for $87, you'd think 'Hmmm, what happened to the rest of it?'" Hunter says.
Instead, you may want to use the gift card to purchase
merchandise that you give the recipient. Hunter even once bought a gift card,
used part of the balance to buy a gift and the remainder to buy a new gift card
-- though that may not work at all retailers.
Fraud on gift card exchanges usually
involves cards that are stolen or counterfeit or that do not have the value
represented to be in the card, says attorney Steven
J.J. Weisman, professor at Bentley University
and editor of the security blog Scamicide.
If you got a gift card from someone for $87, you'd think 'Hmmm, what happened to the rest of it?'
sites have practices in place to minimize those kinds of fraud. For example, when
GiftCards.com buys a card from a consumer who no longer wants it, the consumer
has to provide a credit card number, Hunter says. "If there is something wrong
with the [gift] card, we're going to charge that credit card number. We have a
way to recover that money."
In the most
common scam, however, thieves steal credit card information, use it to buy gift
cards and then exchange those cards for cash via swap sites, says Knowles. Hunter
says her site has safeguards against those kinds of incidents, too. She won't
go into specifics for fear of tipping off fraudsters, but says GiftCards.com
has a fraud rate of less than 1 percent. "We have patented fraud
protection that we have licensed to other gift card resellers because of its
effectiveness," she says. "Fraud is very low and something we
actively and continually work to eliminate."
Getting poll results. Please wait...
In fact, if you're buying multiple gift cards from an exchange for
the first time, your credit card issuer may issue a fraud alert. That's one reason to make sure you don't wait until the last minute to buy from an exchange.
defense against fraud is to check out a discount card site before you use it. Read online
reviews and check with the Better Business Bureau and the consumer protection division of your state's attorney
general's office to see if there have been complaints.
careful with cards sold through general resale sites such as Craigslist. Katherine
Hutt, spokeswoman for the Better Business Bureau, says her organization saw one
recent scam in which a seller bought a $1,000 gift card through Craigslist for
buyer met the seller and actually called the number on the card to verify that
it really had $1,000 on it, and it did," says Hutt. "She handed over
the $750, but when she went to use the card the next day, the balance was zero.
Either the seller was a scam artist who had copied the number off the card and
had used all of the funds before the buyer had a chance to spend a penny, or
the card had been purchased with a stolen credit card and had been deactivated.
Either way, the buyer was out the $750."
sites are another danger zone. Weisman recommends avoiding them altogether. "My
concern with online auction sites is based on the possibility of fraud through
the sale of stolen or counterfeit cards," Weisman says. "That possibility still
exists with reputable sites, however, the legitimate discount card sites will
provide a warranty that can effectively protect the consumer."
Check out the
Weisman recommends making sure the discount
gift card companies you're considering are legit and then going with the one
that provides the best price with the best warranty.
Even among reputable sites, warranty policies can vary widely. GiftCards.com,
which sells both discounted cards and conventional cards, guarantees its cards
for 100 days. The buyer protection policies listed at GiftCardGranny range
from 999 days to 10 days, depending on the website selling the card.
My concern with online auction sites is based on the possibility of fraud through the sale of stolen or counterfeit cards
Steven J.J. Weisman
Professor, Bentley University
"Consumers should use the card before the gift card
company's guarantee has expired," Knowles says. That could be tricky if you're
giving the card as a gift. A Consumer Reports poll in 2011 found that 25
percent of adults still had an unused gift card from the previous holiday
Buy early -- but not
To make sure the card arrives in time for your shopping
excursion or gift-giving occasion, buy it at least a week in advance, Knowles
says. For e-gift cards and codes, the turnaround time is 24 hours or less,
If you're planning to give the card as a gift, consider
waiting until close to when you plan to give it so that you won't use up the
buying protection period with the card sitting in your closet.
Save even more
If you want to save even more money, buy gift cards at the
end of January and beginning of February when the supply and discounts will
be higher, Knowles says. "Gift cards are the most popular gift during the holidays
and people who receive cards they don't want are eager to exchange them for
cash," he says.
That's also good information to keep in mind in case Santa brings
you a gift card for a store that's not your favorite.
"That's why we
created Gift Card Exchange Day on Dec. 26,"
Knowles says, "To bring awareness to the option of exchanging unwanted gift
cards for cash."
If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.
Three most recent Emerging payment systems: Prepaid, debit, gift cards stories:
Did you like this story? Then sign up for CreditCards.com’s weekly e-newsletter for the latest news, advice, articles and tips. It's FREE. Once a week you will receive the top credit card industry news in your inbox. Sign up now!