Gift Cards: How to Exchange Them for Cash
And perhaps stop giving people gift cards yourself — they often misfire
The move toward a cashless society is on full display in the realm of gift giving. An estimated $150+ billion gets spent on gift cards each year. A survey of holiday shoppers this year reports that three out of four expected to buy at least one gift card.
The thing is, while gifting cold, hard cash has somehow become crass, or just so last century, it makes for a better gift. Cash gets spent or saved – 100 cents on the dollar. Yet plenty of gift cards go unused, or partially used, or spent on stuff the recipient wasn’t exactly hot for. Or the card gets lost or forgotten in an email folder, wallet or desk drawer.
Before you mindlessly redeem a gift card for something you don’t really need, or you don’t use a card, consider what financial goals you might tackle if you instead had been given cash.
A quick exercise:
Add up the value of your unused gift cards.
Multiply that by 0.75%
Consider what financial goal you might make a dent in with the amount from Step 2.
There is in fact an online market for selling gift cards. (That, in and of itself, should be a sign that something’s gone awry with the whole gift card trend.) For instance, CardCash, Cardpool and GiftCardGranny advertise cash-back deals they say can be worth more than 90% of the face value of popular cards. Of course, it depends on the card, and the supply/demand when you’re looking to unload your card. (Hint: You might want to wait until a few months after Christmas.)
A spin through CardCash in late December showed an 86% cash-in value for an Apple (not iTunes) card, 87% for a Best Buy Card and 67% for Anthropologie. The suggestion in Step 2 to expect a 75% payback for cashing in a card seems like a reasonable middle-ground estimate for what you might pocket. Your cashing-in results, will of course vary. (If you prefer the eBay model and want to set your price — and wait to see if there are any takers — you might want to give Raise.com a look.)
If you cash in cards, commit to how you intend to use that money before it hits your bank account. You know, that laundry list of financial goals you’ve been meaning to chip away at. Or consider these potential better uses for a gift card:
No emergency savings? Well, you just seeded that stress reducer.
If you’re 40 or younger and can net $200 from cashing in cards, that could cover the entire annual premium for a $250,000 term life insurance policy.
Or get hopping on that Roth IRA. For example, at Fidelity, there’s no investment minimum to open an IRA account. You could use a $100 or $200 bounty from selling gift cards to open the account. Even better, set up an automatic monthly deposit of $50 (c’mon that’s less than $2 a day) on top of your seed investment. Let’s say you start with $150 from your gift-card selling, and then add $50 a month. Keep at that for 30 years, and you will have more than $42,000, assuming a 5% annualized return. That’s some nice leveraging of an unneeded gift card.
Another option is to exchange a card for one you actually need. The online companies typically offer even better deals if you go that route. For example, if instead of cashing in the $100 Best Buy card at CardCash and receiving $87 — a deal recently available at the site — you could have exchanged that card and received $92 for a CVS card, $92 for Bed, Bath & Beyond or $89.44 for UBER.
And one last notion: The next time you consider giving a gift card, consider cash. That ensures 100% of your gift will be used. Doesn’t have to be dollar bills sent via snail mail or tucked into a money card or, gasp, a paper check. If the millennial or Gen Z in your life will scoff at that old-school move, just zap them the money. Zelle, the online transfer system offered for free by most major banks, says that two-thirds of respondents in a recent survey said they would like cold, hard cash so they can choose how to spend it.