It was the end of the calendar quarter and I’d had a brilliant idea. As I stood in the checkout line at Shoprite, I was a little nervous. I asked to put $600 on a Shoprite gift card. I was then told I could only put a maximum of $500 on a gift card. “OK, $500 then.” The cashier asked his manager to come over as this did not happen often. “Can we see some ID?” the manager asked. I showed them my license to verify I was using my own credit card. I could tell they were still a bit suspicious of the high amount so I started explaining. “With my credit card, I get 5% bonus rewards for grocery stores this quarter. I’m going to buy a gift card now, so I can get the points and use the gift card over the next few months.” That transaction alone got me $25 in rewards points that I could later redeem for cash back or more gift cards.
Since then, I’ve been thrill-seeking with gift card hacking, kind of like my couponing addiction.
I’ve mentioned in past posts that I love using credit cards for free rewards points. I ALWAYS pay off the FULL balance every month on time. I never accrue any interest or fees. Going after credit cards rewards points is not the game you want to play if you’re trying to get out of credit card debt. The points you get are just pennies relative to the interest that accumulates if you carry a balance. Please do NOT try this at home if you can’t trust yourself to use a credit card wisely.
Start with a Rewards Credit Card
The first thing you need to start gift card hacking is a credit card that gives you rewards points, particularly one that offers bonus points throughout the year at certain stores or spending categories (gas, dining, etc.). You can check NerdWallet to find a card that’s right for you. I recommend a card that does not have an annual fee, but as I learn more about credit card travel hacking, I’m tempted to sign up for cards that have a fee if the bonuses greatly outweigh the fee. That will have to be a future experiment and blog post!
I use the Chase Freedom card for my hacking. I get 1% back on all my purchases and 5% quarterly bonuses at certain stores and/or spending categories. There is no annual fee. I can use my rewards for travel, cash back, or gift cards. Hence the “freedom.” I prefer to redeem my rewards for free gift cards, but I know others use the cash back option.
Maximize Points by Buying Gift Cards
I was always good about making sure we use the Chase Freedom for the bonus category purchases. If gas was the 5% bonus, we used the card for gas. If dining was the bonus category, you can bet we were using that card every time we ate out. Yet I yearned for more.
Once or twice I toyed with gift card hacking in a direct sense. Walmart was a quarterly bonus store, so I bought a $100 Walmart gift card to use after the quarter ended. I went a bit bigger in the Shoprite example I mentioned above, but I was still just buying a grocery store gift card at the grocery store. Here’s the thing. Both those stores – and many others – also sell vendor gift cards. If you go to Walmart or Shoprite – or a drug store or a club store or many other types of stores – you will find other restaurant and shopping gift cards available to purchase. In theory these are available so you can pick up a last minute gift while you’re already doing other shopping. That’s why they’re called GIFT cards. But what if you got in the habit of buying cards…for yourself?
You could buy a restaurant gift card at a grocery store and then get bonus points for the eating out you’re already going to do. Honestly, I think most of my examples are related to restaurant gift cards. I’ve mentioned in other posts that our family’s splurge problem is eating out! I’ve seen Netflix and Verizon gift cards available. Like I could pay my monthly bills with these gift cards and get 5% bonus points?! I haven’t tried that. I’m scared. I don’t know why. Maybe one of you is braver!
Gift Card Hacking in Action
So let’s go through some examples and extra credit hacks:
The Shoprite gift card piqued my interest. What were the 5% bonus categories in Q3? How could I flex my hacking muscles? It turns out Walgreens was featured that quarter. I could work with that. I went to Walgreens and took a picture of their gift card rack. This made it easier throughout the quarter to confirm in advance that they carried a gift card for my desired location. Throughout that quarter, if I knew we were going out to eat, I’d go to Walgreens and get a gift card first. Note: Unfortunately if you are a member of the Walgreens Balance Rewards program, you can’t get their reward points for gift cards. Basically, no double dipping. Once again, I am proven to not be quite as smart as The Man.
And here we are in Q4. The magic store this time around? BJs. “But MerNe, don’t you need a membership to shop there? Haven’t you said in your couponing posts that it doesn’t make sense to shop at club stores?” This is all true, and I’m glad you’re listening! I never buy memberships to BJs. Every fall, and sometimes other parts of the year, BJs offers FREE 3-month memberships. We sign up for one of those and go gift card shopping! I was doing this even before BJs was a Chase bonus category. A financial follower friend told me a few years ago that you can get slightly discounted gift cards at BJs. Super helpful for Disney gift cards! This quarter I’m in my glory getting discounted gift cards AND 5% back! A serendipitous win was going in to get a Dunkin gift card to reload our app and finding there was a clipless coupon promotion for $5 off a $25 gift card! Which was already only $24.79. So I spent $19.79 and got $0.99 in rewards dollars. Or $18.80 for $25 worth of stuff. I’m getting a rush again just recalling!
After a few months of gift card hacking with my credit card points, I saw a promotion in our Shoprite flyer: buy a certain $50 gift card, get $10 back on your purchase next week. Friends, this is a 20% return. Turns out they offered this almost every week through November and December and some weeks it was buy $100, get $15-20. It mostly worked to my advantage – I went grocery shopping on a Saturday knowing I was going to Seasons 52 with friends on Sunday. I bought a $100 gift card, foot the bill, and my friends Venmo-ed me their shares. Another week I bought a $100 Disney gift card and used money from our vacation fund…because we absolutely know we’re going on a Disney vacation in the next year.
It was nicer on the weeks where you could buy ANY gift card. Some weeks you only had a choice of a few. One week I thought I was smart for buying a Lowes gift card because, guess what, Lowes sells vendor gift cards! I immediately went to Lowes with my gift card and decided to buy an Amazon card…only to find at the register that Lowes doesn’t let you buy vendor gift cards with store gift cards. Curses! I beat myself up so badly when I make mistakes like these. So that’s my warning to not be too creative. I’m not sure which stores will let you use store gift cards to buy vendor gift cards, except for Target which I have confirmed does allow it!
Speaking of Target! On the first Sunday in December every year, Target has a 10% off store gift card promotion! I have used this in the past to buy gift cards for friends, family and daycare teachers. One year I bought a $25 card for myself (I really don’t shop at Target a lot) and last year I thought ahead to buy several non-holiday gift cards for future kid birthday party gifts. Why didn’t I think this year to buy even more so I could exchange for vendor gift cards later? If you shop at Target, this is a great opportunity to get 10% off your future purchases.
Two notes from financial follower friends: 1) if you have a Target Red card, you won’t get an extra 5% off in addition to the 10% and 2) the maximum amount of gift cards you can get is $300 in one transaction (but what’s stopping you from bringing your spouse or coming back multiple times in one day or going to different Targets??).
A Note on Sustainability
Unfortunately my new hobby creates a lot more gift card waste that makes me feel a bit guilty. I did some research a while ago and found a company called Earthworks that recycles used gift cards. If you subscribe to their mailing list (I have only gotten one email from them in the last year, so don’t worry about spamming your inbox), they will email you information on where to send used gift cards for recycling. I’ve basically been collecting mine in a bag so I can send a mass shipment one day. Or maybe there will be more recycling receptacles at local stores.
If you play the guitar, you can make guitar picks out of used cards with a pair of scissors or buy a special puncher just for this purpose. This probably doesn’t apply to a lot of folks though, but if you’re interested, I’d be happy to give you some cards!
Rationalizing All These Gift Cards in Your Budget
Looking back, I wondered why I didn’t start doing this sooner. It’s not rocket science. I think I had trouble with how I would rationalize the future spending in my budget. Should I put the purchase in this month’s spending or the month I actually spend the gift card? Buying a $25 gift card for dinner out tonight is not really a concern because both purchases are immediate. The bigger ticket gift cards that I know I’ll use over many MONTHS are harder.
I decided that I would budget the gift cards when I actually spent them. Since I have some actual GIFT cards and gift cards I redeemed from my rewards points, I just make a note on my “hacked” gift cards to budget them when spent. On the BJs discounted cards I also note the discounted price that I actually paid so I can take that into account. This strategy works for me because I keep some extra float in my checking account. I’m spending more upfront, but eventually it works out.
Where Do I Keep All These Gift Cards?
If you’re a crazy person who doesn’t use gift cards right away because you’re obsessed with delayed gratification , you might be wondering what to do with all of these cards and how to keep them organized!
I googled this quandary a while back and decided the best solution for me was a business card holder. I was thinking about buying one but I’m so glad I didn’t. When I was going through some prior job stuff, I realized I already had one! Now all my gift cards have their own alphabetized slot.
There’s also a lot of newer wallets out there that have more card slots because the world is more into cards than cash these days. Maybe that is the way to go for you!
Are You the Next Gift Card Hacker?
Even if you think gift card hacking to this extent may be too much work for you, I challenge you to take a harder look at your spending and think more strategically. Can you take advantage of a deal today because you know you’ll be spending tomorrow? I know it definitely required a change in my thought patterns.
Will you try gift card hacking afer reading this post? Do you have a great solution for storing gift cards? Let me know in the comments below!