Credit Card
Personal Debt Issues

Gift card exchanges help turn plastic into gold

by Broderick Perkins

(1/2/2012) - If that stocking hung by the chimney with care, was chock full of gift cards from here and from there, you can unload them for nearly their cost, and not sweat it over the small sum you lost.

A fledgling online gift card exchange industry has created an open market for gift card buying and selling and savvy traders can get pretty close to face value for their unwanted gift cards.

You can even use gift cards to pay the bills, including your mortgage.

Gift cards are an ever-more popular gift because of their almost-like-cash appeal, and they come with stronger consumer protections against unnecessary fees and short expiration dates.

Gift cards also take some of the guess work out of gift giving when they come from popular merchants offering a variety of goods or services.

TowerGroup, a financial services research firm, said consumers this year were expected to spend more than $100 billion on gift cards, $9 billion more than last year and more than that spend in three previous years of soft, recession-era sales.

Thanks to the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, for both stronger regulations and heightening awareness, unused gift cards will amount to only $2 billion, about 2 percent of all gift card sales, according to TowerGroup.

"In order to create a level playing field for both the gift card recipient, as well as the card giver and in an effort not to turn the cards into unintended 'gifts' to the issuing retailer, it may be time to require that any unused portion of the card be refunded to the card recipient at the time a store purchase is made," said Nancy Osborne, Chief Operating Officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.

Unused gift cards in the past have amounted to $30 billion to $60 billion a year, according to a variety of sources.

Still, a gift-card to spend at a fast food eatery, big box retailer or national conglomerate probably may not be your cup of tea if you are, respectively, on a diet, politically correct or an occupier.

Plastic profits

Gift card sellers count on you to thumb your nose and not using the cards - it pads their profit centers.

According to GiftCardGranny.com, an aggregate web site for gift card exchangers, in addition to cards that come with a purchase fee, gift card issuers make money on the cards in a host of ways.

• Purchases made with a gift card are from 20 percent to 50 percent higher than the average purchase price, because they amount to discretionary spending. Gift card users also often spend more than the face value of the gift card, once they are in the store.

• Gift card racks are the most profitable square foot of selling space at many retail stores.

• Along with those who don't use the cards at all, 40 percent do not use the full amount of the card.

"(Unused cards) is a good profit center for them because a fair amount of people toss them in a drawer, but if you can get cash for the cards, you beat them at their own game," said Kate Forgach, with Fort Collins, CO-based GiftCardGranny.com.

Fortunately, along with greater protections, there are a growing number of ways to unload gift cards and pad your wallet in the process, most notably, gift card exchanges.

It's only money

Online gift card exchangers buy gift cards below face value, with enough room for a mark up and then resell them, at enough of a discount to make them attractive. They make money in sales volume, says Forgach.

Gift card holders can sell the full value of the card or, in some cases, remaining, unspent value.

Recently, the fledgling industry dubbed the day after Christmas "Gift Card Exchange Day" to heighten awareness about the open market for gift cards.

"The day after Christmas, resellers are paying the highest premium. You don't get full value but you can get 95 percent. The amount (exchanges) pay tapers down after that," Forgach said.

However, GiftCardGranny also points to offers from Ebay buyers where you can unload cards at 100 percent the face value, depending upon the card.

Of course, gift card holders can also get full value simply by selling the cards to friends, family members or other people in their trust, who are willing to take the cards off their hands for near-zero hassle.

Virtually all gift cards are 100 percent transferable, but rarely will retailers buy them back, said Forgach.

In the online gift card exchange market, some sales are fully electronic, requiring only that you supply the gift card number and any pass codes or PINs, as well as a credit card number to protect the exchange from you trying to game the system and use the card after you've given the exchange the numbers.

Others exchangers require that you to mail in the card (often postage free) and wait for payment (via check, PayPal, MoneyGram deposits, etc.) or other gift cards, including popular Amazon.com gift cards.

You also can sell your unwanted gift cards for a credit with which to purchase more desirable gift cards - at a discount - in some cases ending up with an even exchange or quite close to it.

This year, ChargeSmart joined with PlasticJungle to create a system that allows you to use unredeemed gift cards to make payments on utility, car and mortgage bills.

Gift cards are, after all, only money.

As popular as couponing sites, gift card exchanges are frequently popping up, expanding, partnering and being purchased by larger operations.

Along with comparison shopping or aggregate sites like GiftCardGranny and CardHub.com, gift card exchanges include the dot coms Gift Cards, Card Pool, Plastic Jungle, Gift Card Castle, ABC Gift Cards, Gift Card Rescue and a host of others.

Whenever conducting transactions on line, it's always important to understand the site's terms and conditions, privacy policy and the security measures the site takes to protect you and your information.

Tax advice for year-end charity contributions

Keep holiday identity theft in check

Economic protestors' debit card choices more powerful than bullhorns

'Tis the season for gift card buys and gift card bewares