I’m a sucker for buying discounted gift cards to retailers where I normally shop. An extra 18 percent off at Old Navy or 24 percent off at Michael’s in addition to their coupons and sales?
Yes, please!
Online marketplaces allow you to resell unwanted gift cards and get money you can spend wherever you want. Budget-conscious customers like me can then buy other people’s gift cards to retailers where we want to shop for less than the face value of that gift card. Trouble is, the gift card resale market has its share of scammers. A lesson I learned the hard way.
First, I tried buying a $50 Old Navy gift card for $36 on eBay. After I’d paid via PayPal, the seller sent me a sob story about how I needed to mail her the money because her ex-husband had frozen her PayPal account.
This smelled fishy to me, so I didn’t send her money and she never sent me the gift card. At the time, PayPal had a $25 investigation fee so I only recovered $11 of the $36 I’d spent. But I figured it was better than nothing.
Here are some strategies to avoid getting scammed.
Shop from places that offer buyer protection. After my eBay debacle, I switched to buying gift cards through marketplaces like cardpool and Raise.com that offer buyer protections. These two sites verify the value of its gift cards and guarantee it for a full year after your purchase. So if the seller uses the gift card online after the marketplace verifies it, you’re protected. The policies have become more consumer friendly over the years, but it can still be a hassle to get issues resolved.
Use the gift card within the guarantee period. A guarantee does you no good if the gift card sits in a drawer while the guarantee period runs out. Treat gift cards like cash. Use them as soon as possible so the card doesn’t get lost, the balance gets used up, or the store goes bust. For these reasons, it might be best not to gift used gift cards. You have no control over when or how the recipient actually uses their gift.
Don’t combine gift card balances. A few years ago, Starbucks deactivated a gift card I’d purchased from Cardpool with only gave a vague explanation. My guess is the card had been purchased with a stolen credit card. Unfortunately, I’d already transferred the balance to my existing Starbucks account balance, which Starbucks also froze. I was eventually able to get my own Starbucks funds restored and Cardpool made me whole after I contacted customer service. But things would have been a lot easier if I hadn’t comingled gift card balances.
Check for signs of tampering. Sometimes warehouse clubs sell discounted gift cards or other retailers might offer gift card promotions around the holidays. If you’re buying a physical gift card in store, make sure that it doesn’t show any signs of tampering. If the cardboard is ripped or the PIN has been scratched off, don’t buy it! These could be signs that a scammer has written down the gift card code. If that’s the case, they can use it online after the card gets activated at the register.
Even after my two bad experiences, I’ve bought and used dozens of other discounted gift cards with no issues, and I’ve easily saved thousands in the process.
Plus, Cashback sites like BeFrugal and TopCashback offer cashback on some gift card purchases, so you can stack the cash back with the savings on your discounted gift card. For instance, TopCashback offers up to 2 percent cash back on purchases from Raise. So, if you’re buying a $100 Olive Garden gift card for $85, the effective cost of that $100 gift card would be $83.30 after you earn $1.70 in cashback.
Another shopping hack: Look for gift cards from other retailers with the same parent company. Say you wanted to buy furniture from Pottery Barn using a gift card. As of this writing, Raise offered Pottery Barn gift cards at a 2.2 percent discount.
However, you can also use West Elm or Williams Sonoma gift cards at Pottery Barn, and those gift cards are discounted up to 4.4 or 4.7 percent respectively. As you can imagine, I bought a lot of Williams Sonoma gift cards when I was furnishing my home. Even though I planned on using those gift cards at its sister stores.
The key is to be smart about where you buy and plan to use the gift cards as soon as possible.
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Austin, Texas-based freelance writer Susan Johnston Taylor has written about business and personal finance for DailyWorth, Learnvest, The Penny Hoarder, and many other publications. She’s also a regular money contributor to U.S. News & World Report online.