Gift Cards Redefined

Dennis O'Keefe |

Gift cards are becoming more prolific in our modern society.  More often than not, we are allowing recipients to pick and choose their own gift.  In light of the Coronavirus pandemic, gift cards are becoming even more popular as we can avoid excessive trips to the store and minimize our exposure. 

It might be a restaurant card for your favorite uncle or a Visa gift card for your granddaughter.  But these gifts come with their own set of problems.  Many times, I write about big dollar fixes to your finances.  Today, I wanted to take a few paragraphs this issue to help you maximize your small money and help you as a giver and recipient maximize those gift-giving dollars.

Recently, my son achieved his Black Belt in Tae Kwon Do.  He's worked four and a half long years to reach this level.  If I didn't outweigh him by 60 pounds or so, I'd be worried.

Because of the recent crisis, he didn't have a party to commemorate the occasion.  Instead, many close relatives sent him a card in the mail along with a gift card.  Some were for his favorite stores.  Some were Amazon gift cards (which are among the best for reasons I'll detail later).  And some were the ubiquitous Visa gift cards.  

My wife exchanged one of his Visa gift cards for cash and decided to use that very same $50 card at the grocery store.  To her dismay, it did not work.

After much research online and eventually spending over 20 minutes on hold calling the service center, she discovered this particular brand of Visa gift card had a sinister restriction.

With this card, you can only make purchases up to the total value of the card.  She was at Hannafords checking out $150 of groceries.  Since $150 was greater than the balance, she could not use it.

This doesn't seem like a big deal, right?  She could use it many times at Dunkin Donuts or CVS.  But eventually, she'd get to a point where it would be near impossible to have a purchase smaller than the card balance.  This is what the issuer is counting on.

There are only two choices once your balance becomes dangerously low.  Either relegate the card to the "junk drawer" to be forgotten or pay with another method down to the exact remaining card balance and then finish off the card.

Which do you think most folks choose?

If you thought the former, you're 100% correct.  The issuer is counting on this.  This is how they can multiply their profits.  Sure they may have to wait several years to eat up the balance with mythical fees and charges.  But eventually, that unused balance ends up in their bank account instead of yours.

Multiply that by thousands of transactions per year and the issuer could be looking at millions in extra profits. 

That brings me to the second problem - all of those unused cards in your junk drawer.  I know I have a pile of them.  I intend to use them, but I forget.  I've personally found putting them in the center console of my vehicle to be particularly helpful.  That way if I'm at Home Depot or Longhorn Steakhouse, the card is with me, not left at home. 

Many of these cards don't have an expiration date but do have "usage fees" that can range from a few pennies to a few dollars per month.  Every time you don't use them, they lose a little bit more value.  Eventually that junk drawer is full of empty plastic instead of potential enjoyment.

One of the best types of card is a card you can exchange online for store credit immediately.  Amazon is probably the biggest purveyor of this type of card. 

With Amazon, I don't have to wait for my next purchase before remembering to use my card.  In a few clicks of my smartphone - or even a quick use of my phone's camera, I can add the card balance directly to my account to be used the next time I end up shopping online.  Apple and Ebay also utilize this system.

With the recent crisis, and the dog-days of Summer, this might be the perfect time to clean out your junk drawer and find all of those old cards.  For restaurant cards, you can use them to pick up a meal on a hot night.  A store card?  Order something online.  And those Visa cash cards - turn them into cash as much as possible.  And be sure to squeeze out those last few dollars or pennies. 

Thanks for taking the time to read our blog this week. If you have any questions or concerns, please don’t hesitate to email us at or call us at (800) 453-3209.  If you don’t already have a copy of my book, The Biggest Financial Mistakes Retirees Make, you can order it on Amazon or click here and we will get a copy out to you, free of charge!  

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This blog is the opinion of Successful Money Strategies, Inc. and is provided for informational purposes only and is not intended to provide any investment advice or service.  Statistics and other figures are accurate at the time of original publishing.  Any advice herein should not be acted upon without obtaining specific advice from a licensed professional regarding the readers own situation or concerns.  Always count your change.