Gift cards and certificates are a favorite holiday or birthday gift for many people who want their loved ones to choose exactly the gift they want. According to a 2016 Barron’s report, over $970 million in gift card cash went unused in 2015. Although the amount seems high, numbers have dropped since the 2009 CARD Act, which addresses junk fees and expiration dates of gift cards. Gift cards are high on the list of requested gifts – but many people forget to use them, or they leave an unused portion of the value of the card. How often have we used a gift card and left a balance of $1 or $2 on the card, then never bothered to add it to a future purchase?
An unused gift card is the equivalent of cash, but unlike cash it can expire if you forget about it. Other ways to waste the gift card? In today’s economy the vendor could go out of business, or you could simply lose the card. In any case, the longer you wait to spend it, the less value you’re likely to get for the card, as prices tend to climb over time and some gift cards lose value after they sit unused for awhile.
So first check the expiration date of any gift cards you have kicking around, and then make sure you use it. The same goes for gift certificates and vouchers from daily deal sites like Groupon and Living Social. Log into your daily deal site account, see which deals you’ve purchased and their expiration dates, and then plan ahead, especially for any dining deals, visits to attractions or getaway breaks. Then you’re not left trying to use them at the last minute, when it may not be so convenient for you and your family.
If you have an unused and expired daily deal site certificate, note that some keep their purchase value even after the official expiration date. For example, if it’s a half-price restaurant deal, and you’ve paid $10 for $20 worth of dining, even after the use-by date, you may be able to spend it for the original $10 that you paid, so check the fine print.
Finally, if you’re unlikely to use the gift card because you don’t like the restaurant, venue or retailer, think about regifting it to someone else, doing a gift card swap with friends, or selling or bartering it on your local Craigslist. Sites like Plastic Jungle also help you trade in some gift cards, although you probably won’t get the full value.
Best bet? Spend your gift cards. It’s a classic case of use it or lose it.
Gift cards come in handy for the holidays, birthdays and other celebrations. It makes shopping easy for the gift giver and allows the recipients to get what they want from their favorite stores. The NRF reports that gift cards from department stores, restaurants and coffee shops are the most popular for gift giving. According to the National Retail Federation and Prosper Insights & Analytics, consumers say they will spend an average of $1,007.24 during the holiday season this year, up 4.1 percent from the $967.13 they said they would spend last year.
Gift cards are also practical and convenient to purchase. While they come in handy for special occasions, have you ever thought of using them to budget for everyday expenses? This can benefit those who tend to spend money in the wrong places when actual cash is used. This method can also help people who find themselves overspending when using credit cards. No matter how you choose to purchase them, you are locked into the designated amounts to guard against impulse buys or spending elsewhere when you shouldn’t. The only prerequisite is that you know how much you should be spending in each category and be sure to buy no-fee gift cards.
Tips to use gift cards for budgeting and stretching your dollars
Take a look at your current budget.Use each category amount to determine how much to spend for the month on variable expenses like groceries, personal care items, gas, entertainment, etc. Decide how often you want to purchase the amount allotted in gift cards. You might want to start biweekly and see how it goes. You can tweak the frequency if you find that you rather purchase the cards less often. Experiment to figure out a pacing that works best for you.
Start by purchasing plastic or digital gift cards to stores you go to on a regular basis. Purchase the cards in advance to match your budget categories. Start with one area at a time. This will help stabilize your spending and help you budget more efficiently. No matter how much you purchase in advance, spend the amount allotted per week. So if you normally spend $600 a month on groceries, make sure you only spend $150 per week in a month with four weeks. Just be aware that some months are longer than others. Be sure to plan accordingly. You’ll have to spend less per week if the month is longer.
If you don’t mind purchasing physical cards, they might be a useful method to block you from overspending on a credit card. They can serve as a visual reminder in your wallet. It can trigger you to spend using those instead of your credit cards.
Keep track of the balance. Avoid unused balances on the gift cards by attaching the receipt to the card or putting the card back in a business card holder with the receipt. My daughter actually writes the amount on the back of the card in permanent marker to remember the balance. No matter what you decide, it will help you remember what you have left on the card. You can also budget digitally. You just have to remember your target number of what you can spend.
Make your dollars go further. If you’re looking to not only stay within your limits but stretch the allotted amount in your categories a bit, challenge yourself to come under the gift card amount. Start by shaving off small amounts of money like $5 or so. Maybe put back items that you don’t truly have to buy this trip, You can free up cash in your budget and push the date you purchase them a little further out. If you find that you can stick to the new lower limit, you can reload a smaller amount of money and use the extra money in your budget for savings or getting out of debt.
If you find it hard to lock into one store, shop where the discounts are. Look for the savings before you choose where to shop. For example, if you get a discounted gift card from sites like Gift Card Granny, Cardpool or Raise, you can get a discount before you even shop.
Take baby steps. If you wait for sales, you can take advantage of deeper discounts just by being a little strategic. Gyft.com is another gift card site that allows users to reap rewards from their purchases with points. Points accumulated can be used towards future purchases. Start small with one area of your budget, like the grocery store. This way you can experiment with a routine that works well for you and your habits. Once you get a process down, you can apply the same steps to another store like pharmacies you frequent or big box stores like Walmart.
Beware of scams
Online marketplaces allow you to resell unwanted gift cards and get money you can spend wherever you want. Budget-conscious customers can then buy other people’s gift cards to retailers for less than the face value of that gift card. But the gift card resale market has its share of scammers.
Here are some strategies to avoid getting scammed.
Shop from places that offer buyer protection. Avoid buying a gift card from an individual. Buy 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. 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, be careful if you regift them. You have no control over when or how the recipient actually uses the card.
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.
But don’t get discouraged. The majority of gift card purchases happen without a hitch, and customers have saved money by finding discounts on gift cards. 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.
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. Raise recently 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.Take some time to research sister or parent companies and their policies regarding using other cards at their brick and mortar stores.
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