Buying gift cards with cash back/rewards CCs

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russwm
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Buying gift cards with cash back/rewards CCs

Postby russwm » Thu Jun 11, 2015 3:48 pm

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.


Nixon
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Re: Buying gift cards with cash back/rewards CCs

Postby Nixon » Thu Jun 11, 2015 5:42 pm

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.
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russwm
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Re: Buying gift cards with cash back/rewards CCs

Postby russwm » Thu Jun 11, 2015 6:09 pm

Nixon, thanks for clarifying my sales tax question.

Vermonster
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Re: Buying gift cards with cash back/rewards CCs

Postby Vermonster » Fri Jun 12, 2015 12:08 am

The downside to MS is that you negate the benefits of the legit spending. I already spend enough on groceries to come close to the 6k cap on my BCP, gift cards would put me well over.
Chase Freedom $9k~~Chase Sapphire Preferred $6.5k~~Amex Blue Cash Preferred $12.4k~~Citi Double Cash $4.7k

Nixon
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Re: Buying gift cards with cash back/rewards CCs

Postby Nixon » Fri Jun 12, 2015 12:50 am

Vermonster wrote:The downside to MS is that you negate the benefits of the legit spending. I already spend enough on groceries to come close to the 6k cap on my BCP, gift cards would put me well over.


Which is why you have multiple cards that offer high value.
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lobbythis
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Re: Buying gift cards with cash back/rewards CCs

Postby lobbythis » Fri Jun 12, 2015 1:47 am

MS at your own risk. Don't get excited and go on a rampage.

Nixon
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Re: Buying gift cards with cash back/rewards CCs

Postby Nixon » Fri Jun 12, 2015 2:00 am

lobbythis wrote:MS at your own risk. Don't get excited and go on a rampage.


This, pretty much. Unless you have HIGH income and proof of, It's not recommended as to actually make a respectable profit at it you need to be pushing 30-40K/mo worth @ 3%+ margin.
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russwm
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Re: Buying gift cards with cash back/rewards CCs

Postby russwm » Fri Jun 12, 2015 11:15 am

I have to show my ignorance. What is MS?

Vermonster
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Re: Buying gift cards with cash back/rewards CCs

Postby Vermonster » Fri Jun 12, 2015 1:32 pm

MS - Manufactured Spending

It is pretty much buying giftcards with a Grocery cash back card to use at other places. It sort of turns your 6% grocery BCP into a 6% "whatever you can get a gift card for." But again, you do so at your own risk. If a company finds out you're doing it, they could shut you down.

Now doing it with one card a few times a year isn't bad. You tend to see some hardcore MSers over on MF. They'll have at least 2x SM, BCP, EDP, Freedom, It, ect. Basically any card that will offer a grocery category with more than 2%. Then again a Double Cash is really a better option as there is no limit to the 2%.
Chase Freedom $9k~~Chase Sapphire Preferred $6.5k~~Amex Blue Cash Preferred $12.4k~~Citi Double Cash $4.7k

Nixon
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Re: Buying gift cards with cash back/rewards CCs

Postby Nixon » Fri Jun 12, 2015 1:46 pm

Vermonster wrote:MS - Manufactured Spending

It is pretty much buying giftcards with a Grocery cash back card to use at other places. It sort of turns your 6% grocery BCP into a 6% "whatever you can get a gift card for." But again, you do so at your own risk. If a company finds out you're doing it, they could shut you down.

Now doing it with one card a few times a year isn't bad. You tend to see some hardcore MSers over on MF. They'll have at least 2x SM, BCP, EDP, Freedom, It, ect. Basically any card that will offer a grocery category with more than 2%. Then again a Double Cash is really a better option as there is no limit to the 2%.


Hardcore MS = $6,000/yr? Oh me, oh my.
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