5 Secrets for Getting The Most Out of Gift Cards and Avoiding The Pitfalls

by Shelli

Buying gift cards is often part of the points and miles game. Perhaps you’re buying them to hit a certain spend threshold for a credit card bonus. Or you might be stockpiling gift cards when a credit card offers bonuses for shopping categories in certain stores (like drugstores and grocery stores) that sell them.

The Chase Freedom card has rotating 5% cash back categories, like spending at drugstores and supermarkets.

No matter your reason for buying gift cards, many people find themselves left with a few, or possibly an entire stack, of almost-empty and partially used gift cards. Truth be told, I’ve got two such cards hanging out in my wallet right now.

Here are 5 simple but important tips to maximize your gift cards and avoid gift card pitfalls.

1. Don’t Let Your Gift Cards Go To Waste

Seems simple enough. However, consumers leave an average of $1 billion of gift card value unspent every year. And who gets to keep that unspent money? Companies keep it–in exchange for absolutely nothing. It’s crazy to let money slip away by virtue of a gift card. Gift cards should be treated like cash. Plain and simple.

Even if you have less than a dollar left on a gift card, there are ways to spend the gift card down to zero.

2. Know The Difference Between The Two Types Of Gift Cards

Maybe you’ve heard the terms “open loop” and “closed loop” when referring to gift cards.

Examples of an open-loop gift card would typically be a Visa, Mastercard, or American Express gift card. These cards can be used anywhere regular credit cards are accepted.

Visa Gift Cards

Open-loop gift cards

Think of a closed-loop gift card as a brand specific card. The card is meant to be used at a specific store, restaurant, or service provider. For example, a Cheesecake Factory gift card can only be used for purchases at a Cheesecake Factory restaurant.

Cheesecake Factory Gift Card

Closed-loop gift card

3. Be Familiar With The Gift Card Restrictions

Open-Loop Gift Cards Can Be Complicated

With open-loop gift cards, you enjoy being able to purchase whatever you want. However, open-loop gift cards complicate online transactions.

Companies process open-loop gift cards differently from their own store-specific ones. This means when you make an online purchase, you enter the code for an open-loop card in the regular credit-card field.

If you don’t have enough money on the card to cover your entire purchase, there’s nowhere to enter another credit card number to pay the remaining balance, meaning those last few dollars or last few cents on your card are essentially useless when shopping online.

We need to know how to get those last few dollars off of open-loop gift cards.

The Open-Loop Gift Card Workaround

The simple and easy option is to use what’s left on your card to buy an “e-gift card” at an online retailer like Amazon or Walmart. These are online gift cards that can be purchased in any dollar amount with no fees. They can be used at the retailer’s website.

Rather than receiving a physical piece of plastic, you’ll get an electronic code via email. After putting these leftover amounts into Amazon e-gift cards, you can spend them on Amazon’s site.

These cards with a few dollars or cents remaining can be used in stores too. Most stores will let you use up what’s left on your gift card if you make a purchase in-person or over the phone. The rest of your purchase is paid for the way you would usually pay.

Closed-Loop Gift Card Restrictions

Store-specific cards are easier to use up when you shop online. For these types of cards, the restriction is more obvious because they are linked to specific stores.

However, people often forget that many companies allow one store’s gift card to be used at its sister stores. A good example of this concept is a Gap gift card. The Gap gift card can also be used at Old Navy, Athleta, and Banana Republic stores.

It’s a good gift card practice to always make note of the other opportunities for shopping within the store’s family of stores. For example, Target allows shoppers to trade in many restaurant and airline gift cards for one of their store’s gift cards.

4. You May Be Able To Exchange Your Gift Card For Cash

If the cash balance on your card is low enough, there are 11 states in which you can exchange your gift card for the remaining cash balance. Most often, this is the case when the balance is under $10. It’s best though to know the rules in your state. You can find a list of states that allow cash payouts here.

5. The Vast Majority Of Gift Cards Expire

Yes, gift cards come with expiration dates. Some of them actually have an inactivity fee. Know the fine print on your gift card about expiration and inactivity fees.

Where To Find Gift Card Deals

Often gift cards can be had for less. Who doesn’t love a good deal, right? Certainly I do, and I’m sure you do. One easy place to check for gift card deals is here. The team at DOC assures me that their page is automatically updated with the latest gift card deals they post.

Final Thoughts

A general rule of thumb is to avoid letting your gift cards go unused. Because whether you purchased them or you were gifted the cards, they are cash, after all. Check those expiration dates! Knowing company rules on each type of gift card keeps you from gifting your own money back to the store. Manufacture spend smartly. Close the loop and use those cards.

The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.


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JAMES SCOTT WAGNER March 9, 2019 - 8:30 am

Im glad I clicked on your blog post. I thought it would be a nice review. learned a few new things. I’ll be sure to consider more of your posts when i do a general review of what’s new on Boardingarea. Thanks!

Shelli March 9, 2019 - 10:04 am

Thanks for reading and glad you found the post useful!


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