An Afternoon of Gift Card Reselling: $400+ Profit in about 2 hours

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Gift Card Reselling play by play

A Day In Gift Card Reselling

Yesterday an opportunity for reselling gift cards presented itself. Staples is selling iTunes gift cards at 15% off, but the market has been kind of saturated with them. A company I sell to opened up some space to buy these cards. Additionally, a digital coupon deal at Kroger stores on Carter’s gift cards presented an opportunity.

Some Success & Some Frustration

I have three Smith’s (Kroger) stores within 1.5 miles of my house and a Staples about 3 miles away. Since I didn’t have a ton of time, I plotted out an ideal route to hit these four stores as quickly as possible. The day went fairly well, but there were some bumps.

At Smith’s #1

My wife was tagging along with me and we went into Smith’s #1 (one block from our house) cautiously optimistic. This store randomly denies gift card purchases with a credit card, but we have mostly had success with merchant cards. On the rack were 20 Carter’s gift cards, so we split them up 10 & 10. My wife had the tougher job since she had the baby as well! 🙂

Result: Success! In and out in 15 minutes. $2,000 purchased. 

Smith’s #2

Smith’s #2 is the second closest one to our house. After having such an easy time buying volume at Smith’s #1, my wife and I decided to have her go in and try to buy all of their cards so I could watch the baby. It is much less stressful that way. She bought all 19 cards they had in stock.

Result: Success! In and out in 10 minutes. $1,900 purchased.

On to Staples

At Staples we had a similar strategy. She would go in and try to feel out their limit (this store is wildly unpredictable with their limits) while I waited with the baby. Depending on what she was able to buy, I would then go in and buy more.

Result: Success!?! The good news is my wife emerged with 15 X $100 cards and 10 X $50 cards. The bad news is it took almost 30 minutes! It was a holiday and thus busier than normal and they called to authorize her credit card. Unfortunately we were running low on time, so I decided not to go in and spend another 30 minutes.

Smith’s #3

Feeling confident about the first two Smith’s, my wife headed into the 3rd store to buy them out. Unfortunately our streak of luck was over. The manager at that store said “cash only” and went on to say that it was “corporate policy” which we all know isn’t true.

Result: In and out in 3 minutes. $0 purchased. 🙁 #FAIL

What We Earned

In the end, we spent about 90 minutes driving around and buying gift cards.

Here is what we earned:

  • $78 profit from selling the Carter’s cards.
  • $98.35 credit card rewards from using our BofA Cash Rewards card at Smith’s.
  • 8,500 Ultimate Rewards points for the iTunes cards by using a Chase Ink Plus at Staples.
  • 7,800 fuel points ($7.80 per gallon off in gas. Can be used up to 35 gallons and only $1 off at a time.)

Assigning a Value

The fuel points are tough to value, but I think we’ll be able to use all of them. Thankfully Smith’s is pretty much the cheapest station around here except for Costco, so the savings is close to $1. To calculate their value, I’ll figure a 15 gallon purchase X $7.80. That gives me a savings of $117. Given that fuel points expire at the end of February, I think we have enough now for our own use and thus I won’t assign them value for any purchases going forward.

As for the Ultimate Rewards, I’ll value them at 1.5 cents each. That valuation works for me, however feel free to assign your own.

So here is how it looks now:

  • $78 Profit from sale
  • $98.35 Credit card cashback
  • $127.50 (8,500 UR)
  • $117 (Fuel Savings)
  • Total “Profit”: $420.85

Considering we spent about 90 minutes shopping plus another 30-45 minutes entering the cards and on bookkeeping this was a somewhat fruitful venture. My wife and I were together already running errands, but this truthfully could have been done by one single person in the same amount of time.

Other Notes

I chose $100 denomination cards simply because that is the denomination I had reserved space to sell. The cards are variable load so I am looking at the possibility of selling higher denomination cards in the future since the card inventory is a big limiting factor.

The annual spending year just reset on my Old Blue card, so I decided not to use it for these purchases since it would not have earned 5%. Instead I used a BofA Cash Rewards which earns 3.5% cashback (thanks to my Platinum Honors status) on the first $2,500. To keep things simple I kept using it for 1.75% on the small amount above $2,500 in order to avoid splitting up the transactions.

Finally, I should note that it takes weeks for me to get paid for these cards, which means I am floating the cash. Thankfully this wasn’t a high amount of spending and I was able to sell all of these right away meaning I’ll get paid in two weeks or so, but the biggest thing you need to be aware of is float. I am comfortable floating this money (and more when needed), so that wasn’t an issue.

Conclusion

There is definitely some frustration with gift card reselling and stores making up policy and/or having more restrictive policies of their own, but taking advantage of deals like these can be lucrative if you have the patience and ability to float some funds.


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31 COMMENTS

  1. Oh Man, at 5% you could have really killed it!

    Shawn,
    Do you know if a person has say 2 Cash Rewards card from BofA that they would get 2x the $2500 cap then?

  2. Sounds like an adventure, thanks for writing it up. Could you elaborate on this a little bit:
    > I chose $100 denomination cards simply because that is the denomination I had reserved space to sell.

    • Yes you need to put in a little effort to establish bulk relationships but it is something that anyone (especially a long time reader such as yourself) can do. This post is designed to show people it is possible. Nothing more.

  3. Shawn – do you have multiple Smith’s (Kroger) rewards cards? Is that how you picked up so many Carter’s GCs? I only purchased $2k face value in $100 denominations.

    • It was a one day special opened up by a company I work with. Right now there isn’t much opportunity to sell for a profit because the market is flooded with cards. Hopefully after Valentine’s Day things will get a bit better.

    • CC points/cashback is not taxable since it is considered a rebate. I would think the gas points fall in the same category, but I’m not certain on that.

      Regardless, you have to keep good records on this. Add in the risk involved, and it’s not for everyone.

      • If you say “rebate” some might say it should be a reduction in the COGS (cost of goods cold) – therefore indirectly taxable. I am only talking about a business environment here, Some still take the course of “no 1099 – no tax”.

        As said before go with your tax professional, and the level risk you can tolerate.

        • The rebate isn’t taxable for personal redemption. But if you use it for inventory to repurchase gift cards, then yes it affects your cost basis as that’s for business purposes. In addition to that, you would be subject to self employment taxes. At that point you’re much better to seek a CPA, but you better have clear understanding of your expenses and how you paid for certain items. This doesn’t address the risk that at no point do you have protections from any bank like you do with a VGC. If a buyer changes the rate on you, you can be stuck losing potentially lots of money as we’ve seen many brands lose their value (Gap, iTunes, etc.). GC arbitrage isn’t arbitrage as rates are subject to change at any given point. It certainly has some appeal but I’m surprised none of the blogs have dug into the SOPs which they’ve signed up and disclosed some of these risks publicly without naming their buyers to prevent any NDAs they may have.

    • In this case I sold to The Plastic Merchant. I am not sure if they are taking new sellers or not at this point. There are a ton of companies that buy gift cards and it can pay to setup a bulk relationship. I currently have bulk seller accounts with 5 companies.

  4. Never quite understood the resell of gift cards. Maybe some can break it down a bit? You find a discounted card deal..buy up the cards (in this case Carter cards.) If you are lucky you may have some type of stacked deal or incentive. Got it. Maybe a means to hit min spends.

    Who buys the these kinds of cards online unless they are discounted? When you go to sell them, the profit is already limited, then the broker (website) takes a cut. So not seeing much on way of profit at all here, which is excluding the time it takes to locate a source, create an account and liquidate.

  5. An auditor would be hard pressed to catch the gas savings and the points (if they’re even taxable). Take the mileage deduction and a few other costs, and I think you would have a pretty small tax liability.

    It would an interesting P&L though. I guess with these transactions we’re looking at $5,978 sales with COGS of $5,900. It would look like a pretty slim gross margin percent at 1.3%.

  6. Very nice work!

    One question: Do any stores ask you to fill out ‘forms’ for the purchase of so many cards?
    I have been asked to do so at Staples and have walked out…. could you give us some info on this practice of stores asking for quite a bit of information – including your ss number?
    What is your opinion of giving up so much info.. possibly for tracking purposes I presume.

    • Staples limits daily gift card purchases to $2000/day online due to anti money laundering laws so it may be a similar situation in store.

      • Thank you Thomas for your reply. Appears that on line is a bit looser than in store.
        What is your opinion about filling out requested forms? No problem or… ?

    • I very rarely run into stores that ask me to fill out a form but I always comply when they do. I don’t believe I have been asked for my social security number and would hesitate to give that out. Generally they just record information from my Driver’s License.

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