russwm wrote:I have noticed that a number of people use their cash back or rewards credit card to purchase gift cards for for certain merchants. For example, if you have an AMEX Blue Cash preferred, you might purchase a Home Depot gift card at Albertson's to get 6% cash back on your Home Depot purchase.
An alternative that will actually result in bigger savings in many cases is to use your cash back card to buy discounted gift cards from a website like cardpool, giftcardzen, abcgiftcards, giftcardgranny, etc. Let's say you need to spend $100 at Home Depot. You buy a $100 Home depot gift card from cardpool for $92, using a credit card that gives you 1% cash back, and your total cost is $91.08, if my math is correct. If you used your AE BP, your cost would be $94. Not enough to retire on, but over time it all ads up. Many gift cards are discounted 15% or more on those websites.
Do you pay tax when you buy a gift card at a grocery store? If you do, then that would be an added benefit, because you generally don't have to pay tax when you guy a gift card form one of the online resellers.
Most of you probably already know about this, but for those of you who don't , I hope this helps.
Tax is on the purchase of goods themselves.
But yes, I do this routinely unless the discount on the gift card is less than 4% in which case I may fare better just buying at Staples or other office store.
I also use a card which gives more than 1%, but that's besides the point.