Unusual Investments

Alternative Investments | 150 ways to invest your money

Can You Make Money Flipping Gift Cards with Bonus Offers?

gift card

This strategy is relatively simple.  You take advantage of gift card bonus offers which are typically available around the holidays.  You buy the main gift card, get a bonus gift card, then sell the main gift card online. The main gift card might be $25, and the bonus might be $5 (or it might be $50 and $10, it is usually a 20% bonus).  Hopefully the bonus gift card will be worth more than the discount you will take selling the main gift card, so the transaction will be “profitable.”

This Strategy Does Not Work

The biggest problem with this strategy is that you have to take to big of a discount when you sell the main gift card.  Buyers are generally only going to buy a gift card from an online gift card marketplace or auction site (eBay) if they can get it at a discount.  Otherwise they would just buy the card from the merchant themselves.

Additionally, these websites all take a cut.  For eBay, it is generally 12.9% when you include their fees plus PayPal fees.  Gift card marketplaces that buy gift cards and resell them online need to build in a profit for themselves, and that might be a 20% gap between the price you can buy from them and the price you can sell to them.

I picked out a few restaurants that I pretty much go to at least once per quarter to see what the profit would be from buying the gift card with a bonus card, then selling it through a gift card marketplace (these generally sell for more money and are quicker than eBay).  I used GiftCardGranny to see the top offer available for the gift card.

RestaurantMain Gift CardBonus Gift CardMoney from SellingBonus Card + MoneyNet
CPK$100$20$68.01 on SaveYa$88.01-$11.99
Carl's Jr$25Free Thickburger ($6.37 value including tax)$18.88 on CardKangaroo$25.25+$0.25
Einstein Bros Bagels$25$5$18.13 on Save Ya$23.13-$1.87
Outback Steakhouse$50$10$37.51 on CardKangaroo$47.51-$2.49
Pei Wei$25$5$16.25 on ABC Gift Cards$21.25-$3.75
Fox Restaurant Concepts$100$20$62 on ABC Gift Cards$82.00-$18.00

As you can see, the only one that was “profitable” was Carl’s Jr, and that was just barely.  If you look at all gift cards with bonus offers, you will be lucky to find one that even generates $1 to $2 of profit on a $50 purchase.  Even if that happens, you still should not buy it.  Why?  Because you could buy the same card you are holding for cheaper through the gift card marketplaces themselves.

You are Overpaying for the Bonus Card

Let’s say you can find the rare instance where you can get a $10 bonus card for $9 by selling the main card.  That same $10 gift card could have been bought cheaper online.  The gift cards that offer bonus cards generally sell at large discounts online.  Restaurants like Chick-Fil-A or McDonald’s might only sell at an 8%-10% discount, but they are not the ones offering bonus cards.

Here are the best prices available on the six bonus cards mentioned above:

RestaurantValue of Gift CardBest Price OnlineDiscount %
CPK$100$82.40 at Raise17.6%
Carl's Jr$50$46.00 at SaveYa8.0%
Einstein Bros Bagels$25$18.13 at Gift Card Spread26.8%
Outback Steakhouse$50$42.12 at Raise15.8%
Pei Wei$25$20.50 at ABC Gift Cards18.0%
Fox Restaurant Concepts$100$84.20 at ABC Gift Cards15.8%

The strategy of flipping the main card and keeping the bonus card is generally a loser, but even in the rare instance when it makes money, you are getting the bonus card at very small discount (1% in the Carl’s Jr example).  You could have bought a Carl’s Jr card much cheaper online.

When It Makes Sense to Buy Gift Cards with Bonus Cards

It makes sense in a couple of instances.  One is when you are not planning on flipping the main card or the bonus card.  You plan on spending them both, and you are effectively getting a 20% discount.  That might be cheaper than the discount being offered online at gift card marketplaces (maybe not).  Another caveat is that the bonus card sometimes requires you to spend in quickly, like in the month of January, so it might end up not being used in time.

The other instance is when you are at the restaurant or retail store and about to check out, and you are about to spend that much money, or close to that much money anyways.  Buying from an online gift card marketplace takes lead time, and if you are at the counter, you are out of time.  The fact that you could have gotten the same card slightly cheaper online is meaningless at that point.

If your tab at Pei Wei is going to be about $30, buy the $25 gift card first, then order after you have it in your hand.  You just got the meal at a discount, and it took almost zero effort.

 

Comments

comments