Now that Office Depot no longer sells $500 loadable Visa or Amex cards (at least, for now), a number of people have asked me about $200 Visa cards. All three of the big office supply stores (Staples, OfficeMax, and Office Depot) sell $200 Visa gift cards with a $6.95 fee. And, there are credit cards that offer 5X points or 5% back at office supply stores (see “Best Category Bonuses“). If you were to use one of these credit cards to buy a Visa gift card, is it a good deal? To answer that question, let’s look at two scenarios: the first is where you plan to use the $200 Visa cards for day to day spend; and the second is where you plan to liquidate the gift cards.
Day to day spend
Even if you ignore the fact that gift cards are a pain to deal with, the answer to whether they are a good deal is still complicated. It’s easy to look at the number of points earned and compare to the cost of the gift card, but that’s not the whole story. It’s equally important to look at the points or cash back not earned when using the gift card.
For example, suppose I buy a $200 Visa gift card for $206.95 and I pay with a card that offers 5 points per dollar at office supply stores. In that case, I would earn 206.95 X 5 = 1035 points. So, you could argue that I bought 1035 points for $6.95. That sounds like a good deal since $6.95 divided by 1035 points = .67 cents per point (about 2/3 of a penny per point). The problem with that analysis is that when you use the gift card, you do not earn additional points. So, when you use the $200 gift card, you forfeit the points you would have earned with a credit card. At a minimum, you forfeit 200 points, but if you use the gift card in places where your credit card would have earned bonus points, then you are giving up even more. If you commit to using the gift card only where you have no credit card bonuses, then you can estimate that the total points forfeited = 200. Then, your total points earned from buying the gift card are the points earned minus the points forfeited: 1035 – 200 = 835. Given this, the cost per point = $6.95 / 835 = .83 cents per point, or about 4/5 of a penny. Now that you have a calculated cost per point, you can decide whether the effort involved in buying and using gift cards is worth the benefit of being able to buy points for .83 cents each.
Note that the above analysis assumes that the type of points forfeited are roughly equal in value to the type of points earned. If you would have used a credit card that earns more valuable points, then its worth redoing the above calculations accordingly.
Buying and liquidating
Another option is not to use Visa gift cards, but to turn them into cash. If this is your intent, its not necessary to calculate points lost from another credit card (since this is spend you would not have done otherwise), but you do need to calculate the cost of liquidating.
Let’s say that you live or work near a drug store that allows you to pay for reload cards with Visa gift cards. Typically, reload cards come with a $3.95 fee and can be loaded up to $500. If you use 5 Visa gift cards to buy two reload cards and load each one to $496.05, then you’ll completely use up the Visa gift cards in exchange for $992.10 which is basically equivalent to cash. Now we can add up points and costs:
- 5 Visa cards @ $206.95 = $1034.75
- Points earned = 1035 X 5 = 5175
- Cash returned = $992.10
- Total cost = $1034.75 – $992.10 = $42.65
- Cost Per Point = $42.65 / 5175 = .824 cents per point
Is it worth it?
Its interesting (to me!) to see that the cost of buying points comes out about the same regardless of whether your goal is to use or liquidate $200 Visa cards. For certain kinds of points (Ultimate Rewards, for example), I would gladly buy points at .83 cents each all day long. At a minimum, those points can be exchanged for cash at 1 cent each so you’re already ahead by 17%. If you use the points for valuable redemptions, though, you could easily get 2 cents per point or much more value.
The calculations above do not include the cost for gas, nor do they account for the time and hassle involved. For me, it’s a bit too much trouble for the gain, but its close! How about you? At ~.83 cents per point are you a buyer?
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[…] 5X office supply stores: Use a card that earns 5X at office supply stores (see “Best Category Bonuses“), and buy Visa, MasterCard, or American Express gift cards at such stores. See, for example, “$200 Visa cards. Are they worth it?“ […]
Oops. Meant to say Mastercard gift cards. In any event, these cards come with PIN codes.
Staples is offering a $20 rebate on these cards for the week starting Sunday April 27, 2014.
I will try to buy three $200 cards for a $21 fee, $20 of which will be rebated. These cards can be loaded to BB.
That will put me $600 dollars (and 1200 miles) closer to meeting the minimum spend requirement on my Citi AA business card.
[…] Miler recently posted about this: http://boardingarea.com/freque…they-worth-it/ Whether you liquidate the GC or spend them on spending that would otherwise earn only 1x (or 2% CB […]
I used 3 VISA cards to pay tax last week over the phone. I had to repeat my information (i.e. SSN, name and addres)and the agent had to type them separately 3 times. I’ll not do more than 5 cards even if the agent has the patient.
Stvr: that’s not a good idea. You could technically do it by calling and reading all of the numbers out but…
I have a $14K tax bill. Can I use 70 of these to pay my taxes?
Russell, Love it when someone has a plan. Looks like you’ve really thought it through. In these times its easy to get confused in the “fog of mileage earning”. Glad to see others have a mapped out strategy as well.
Chris — I can’t get target to do a load with more than 6 swipes. Have you loaded 10x$100 visa?
Larry — I’ve been out of the country for the past few months, but when the Office Max 2x$50 GCs for $90 promotion ran, I was able to swipe 20 $50 cards in a load. There was a flurry of behind-the-scenes activity with the on-duty manager calling someone higher up to make sure that this was acceptable, and the cashier asked several (what I consider) intrusive questions on what I intended to do with the cards and how I got them, but this all occurred while loading without pause. At no point did they stop the process.
@Spencer’s comments on Staples online via $100 cards is the best way to go for me. Buy online, take to Target. To bring the cost down to match other plans, I seek out the no-fee ATMs.
When TCB cooperates, this works well (if you can stand the glares from the customers waiting in line).
Has anyone actually successfully used the $200 Visa cards to purchase vanilla cards at CVS? Assuming that you wanted to buy two $500 vanilla cards, you’d actually need to swipe the card six times. Would that even work?
On a somewhat related note, I stopped by at my local OD store that was relocating to a new location. While I was browsing the aisles I came across the old variable reload Visa cards. I got excited and quickly grabbed the remaining three thinking I can reload them with $500 each. Unfortunately when I got to the register and the cashier tried to load them they all got rejected 🙁
If you’re looking at this from a cash back perspective, then it’s only equivalent to 1.7% CB and completely not worth it.
For myself I try to use a threshold of 0.8c/point max for UR and MR(and much less than that for say Hilton) otherwise you end up actually spending quite a bit just to accumulate points. I found myself doing this, as this game can be addictive, until I laid all the costs out on a spreadsheet to derive a set of ‘rules’ for myself on which tactics to use and more importantly which to stop doing. It is so easy to lose track and overspend.
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For example:
Compare AP with GC. 5X$200@OD with Ink 5x vs. 2x$500@Grocery with AMEX personal gold 2x.
More points with INK but costs 0.7c/point, AMEX is only 0.6c/point(or put another way with INK you are out of pocket $34.75 a month, with AMEX only $11.90 a month).
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Play for the long game – always keep the costs as low as you can.
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Examples of these rules:
No AMEX prepaid for less than 2x
No AMEX Target with GC (0.95c/point with OD, 1.24c/point with grocery GC) – much better to do direct load with say 1.5x that comes with United Club card – Also don’t do Target with direct load at 1x as this would cost 1.29c/point
Not worth it, sigh…
Now, I did pick one up when there was a $15 rebate. Otherwise, just too much hassle.
I wanted only one of this to give gift to my niece. The OD store i went to only has the $100 ones for $6.95 and would only accept credit card for $6.95 card fee only and $100 in cash.
I bought it at the super market store later.