Buying gift cards takes some of the stress out of holiday shopping, especially when you’re just not sure what to get all of the people on your list. Using a rewards credit card to purchase them could score you some big savings in the process.
Playing the credit card rewards game requires a little planning and know-how, so you’ll need to be clear on the rules before you give it a shot. Not all cards are created equally so you want to make sure you’re getting the most out of every penny you spend. Here are some tips for hacking your credit card rewards to get the best deal on holiday gift card purchases.
1. Check your rewards structure
Before you start grabbing up gift cards, you want to take a look at your card’s rewards structure to see where you can get the most mileage for what you buy. If you earn points or cash back on everything, then you’ve got a lot more shopping options but some cards limit rewards to certain kinds of purchases or spending categories. Where you get the most rewards should determine where you buy your gift cards.
For instance, if you have a card that pays you cash back at grocery stores or gas stations, buying gift cards at those places is a no-brainer. If you get 6 percent cash back, that’s $6 you’ll save for every $100 you spend. You can then take the cash you’ve earned and use it to pick up more gift cards or apply it to your balance. Either way, you’re getting a discount just for using your rewards card.
You should also be paying attention if you’ve got a card that rotates spending categories. Usually, around the holidays is when you can get the most rewards when you spend at big-name retailers like Macy’s or Best Buy. If you’re buying for someone who loves to shop online, cards like the Chase Freedom® Visa pay 5 percent back when you shop at Amazon or Zappos and both sites sell digital gift cards that are delivered via email.
2. Convert rewards to gift cards
If you’re sitting on a big pile of cash back or points that you haven’t redeemed, you should also check to see if you can swap them out for gift cards. Citi cardholders, for example, can convert their ThankYou rewards into gift cards for restaurants and retail stores starting with as little as 2,500 points. If you’ve got a Discover card, you can take the cash back you’ve earned and use it to buy gift cards that can be used at gas stations, restaurants, movie theaters and more.
You can also browse through the different gift card offerings available on Points.com. As long as you’re got a participating rewards card, you can redeem your points or travel miles for gift cards to hundreds of retailers, including Best Buy and Amazon. Eligible cards include the Visa Signature card from Alaska Airlines and the Hawaiian Airlines Elite World MasterCard®.
3. Get a discount
Another option for saving on holiday gift card purchases is to buy them at a discounted price. There are dozens of gift card exchange websites where you can them for less than the face value amount or trade away any unused gift cards you’ve got lying around. GiftCards.com, for example, regularly features cards from thousands of merchants including CVS, L.L. Bean and Old Navy. Discounts can range from as little as 4 percent to as much as 25 percent off. The kinds of cards that are available change up frequently so you’ll have to keep your eyes peeled if there’s a specific deal you’re looking for.
You can also take advantage of gift card markdowns when you’re out and about. The recently released Raise app sells cards to stores like Target, Home Depot and Starbucks at discounted prices. Cards can be shipped to your home or delivered electronically so you can use them in-store the same day.
You can save as much as 10 percent on gift cards purchased through the app, on top of any points or cash back you’ll get from using your rewards card to complete the transaction.
4. Look for gift card giveaways
As an incentive to generate more repeat business, you’ll see a lot of retailers offering free gift cards as a bonus when you spend a certain amount. Typically, the cards themselves are only worth about $5 or $10 a pop but if you collect enough of them, it can add up to a decent holiday treat for someone else. If you were already planning to use your rewards card to shop at a particular store, free gift cards are a nice little perk.
When you’re scoping out places that offer a gift card bonus, you want to pay attention to how much you have to spend to get it. You don’t want to rack up a bigger balance than you can afford just to get a few bucks worth of gift cards. Some stores also place restrictions on how the freebies can be used. For example, this year CVS is offering a $5 gift card free when you spend $25 but that only applies to purchases made online.
Bottom line, make sure you’re clear on what the rules are before you buy so you don’t end up with a bunch of gift cards you can’t actually use.