Getting the Most of Gift Cards

Whether or not you think they are impersonal or the best gift idea ever, gift cards are a popular item to buy during the holiday season. Kelli Grant, Senior Consumer Reporter for SmartMoney.com, offers some tips on how to get the most out of the cards.

First, use discounted gift cards for shopping. Even if you think a gift card isn't the right gift, consider taking advantage of opportunities to buy them at a discount at stores where you plan to shop this holiday season. Paired with sales or coupons, you can save substantially. Borders recently offered a $10 bonus card with a purchase of $50 in gift cards. Kelli combined that with store coupons before Thanksgiving to buy books and DVDs for friends, and ended up getting about $100 worth of items for the $50 spent.

Don't forget to monitor retailer promotions. New York restaurant group BR Guest is discounting the price of its cards by 20% through mid-December, and The Container Store is offering a $25 bonus card when you buy a $100 gift card before the end of the year. Warehouse clubs also regularly offer cards for up to 30% off face value.

And if you are looking to do something with your credit card rewards, why not cash them in for gift cards. Credit card issuers offer bonuses for taking gift cards in lieu of cash. At Citibank, the same number of points gets you either $150 in gift cards to Macy's or $100 cash.

Also, if you are already planning on buying gift cards for family or friends, why not save a little money and buy secondhand cards. Websites like PlasticJungle.com and GiftCards.com buy unwanted cards from consumers, verify the balances and then resell them at a discount. You could save up to 30%. eBay also has plenty of low-priced gift card offers, although you'll need to make sure the seller has a favorable rating.

And finally, remember to watch out for fees. If you're interested in buying a bank gift card that can be used pretty much anywhere a credit card is accepted, read the fine print. Most cards cost $5 to $10 just to purchase, and can incur monthly fees of $2.50 if the card isn't used within a year. The friendliest option for your recipient is currently American Express gift cards. You'll pay $7 for the card itself, but Amex recently discontinued all other fees.

For more information on gift cards and other financial tips, visit www.smartmoney.com.
by Jenn Eaker and Kelli Grant