How to liquidate small denomination debit gift cards

There are many reasons that you may end up with lots of small denomination debit gift cards.  OfficeMax frequently runs deals, such as “$15 off $300 or more in Visa gift cards.”  And Staples frequently offers Easy Rebates where the $15 or so rebates come in the form of either Staples gift cards or a Visa gift cards.  And there are Amex Offers which often make it possible to buy Visa or MasterCard gift cards for less than face value (see this recent post for examples).  Then there are the new Five Back Visa cards that give you 5% back when used at certain stores.  If you buy $500 Five Back Visa cards and use them fully at qualifying stores (CVS, for example), they’ll be reloaded with 5% of the value: $25.  Now what do you do with them?

The Free-quent Flyer recently published a guide to “Liquidating tiny-denomination prepaid debit cards“.  Check out his post for full details.  He covers the following:

• Buy gift credit (e.g. load up your Amazon or Starbucks balance).  We have a post about the former here: Bet You Didn’t Know: A Quicker Way to Finish Draining Prepaid Gift Cards at Amazon.
• Pay bills
• Liquidate as usual (e.g. use as debit card to buy money orders or pay bills)
• Pay Up (pay bills via Plastiq with a 2.5% fee)

The Free-quent Flyer offered good advice, but missed 3 of the 4 methods that I personally use most.  I do sometimes buy gift credit, especially at Amazon, but I also do the following:

Use as intended

Carrying around small denomination gift cards and keeping track of their value can be a huge headache.  So, I don’t usually do that.  But, if I have a bunch of very small gift cards and I’m headed out to spend money (especially at a chain such as CVS, Target, etc.), I’ll bring along the gift cards to use when checking out.  Most chain stores have registers that auto-drain gift cards.  Let’s say, for example, that you have three $25 Visa gift cards, and you’re buying $100 worth of stuff.  In many stores you can simply swipe the first gift card and the register will automatically take $25 from that card and then ask you for $75 more.  Repeat until you’re out of gift cards, then pay for the balance with a credit card (or store gift card).

Do good, get your money later

Kiva is a nonprofit organization that facilitates micro-loans to enterprising individuals around the world so that they may earn their own way out of poverty.  Kiva loans do not earn interest, but they can be paid for with a credit card or a bank gift card (Visa, MasterCard, etc.).  Most loans pay out in installments over the life of the loan (typically 8 months or longer).  Loan payouts can be withdrawn to your PayPal account and then deposited from there to your bank account.

My approach to using Kiva to drain small denomination debit gift cards is as follows:

1. Add Credit.  Log on to Kiva, go to Portfolio (click icon on top-right), then click “Add Credit”.  Enter the amount you want to add (the current value of your gift card).  When asked to log into PayPal, select instead to “Pay with Debit or Credit Card”.  Then checkout as guest.  While I’ve never used a gift card this small, it appears that you can fund as little as 1 cent!  As an aside: this looks like it can also be a great way to meet the 20 or 30 charges per billing cycle bonus point requirements of the Amex EveryDay and Amex EveryDay Preferred cards.

2. Loan Credit.  Credits cannot be withdrawn until loaned and paid back.  The minimum loan amount is $25.  I like to use a web app called Kivalens to filter to “safe” loans, loan only $25 per borrower (to spread risk), and sort by loans with the quickest payouts.  Full details can be found here: Manufacture Spend (and do good) with Kiva and Kivalens.

3. Withdraw payouts.  About once per month I look at my Kiva balance and decide if there’s enough there to be worth withdrawing.  If so, I’ll request the withdrawal through the Kiva.org website.

Advantages

• Do good!
• Easy way to drain gift cards from home.
• Works with all forms of bank gift cards: Visa, MasterCard, Amex*, etc.  Also works with virtual gift cards.

Disadvantages:

• Money inaccessible for many months.
• No guarantee of pay back.  I’ve been loaning through Kiva for over 5 years and have slightly under a 1% default rate.  Kiva currently reports that the average Kiva user’s default rate is 1.35%.
• Opportunity cost.  Kiva loans can also be funded by credit card.  I usually use my FlexPerks Visa which gives me 3X points for “charitable donations”.  Even though Kiva loans aren’t donations, the loans still code as charity on credit card statements and therefore earn the bonus.  So, when I fund loans with gift cards, I am losing out on 3X rewards from my FlexPerks card.

Personally, I love being able to easily drain gift cards from home so, for me, the advantages outweigh the disadvantages.

See also: Manufacture Spend (and do good) with Kiva and Kivalens.

Invest in KickFurther Consignment Opportunities

Kickfurther is a platform that lets companies seek funding from the Kickfurther community by offering a return on investment (such as 8% profit in 10 months, for example).  Technically, these offers aren’t loans.  When you invest in a Kickfurther offer, you are actually buying inventory that is then sold on consignment by the company seeking funds.  With Kickfurther, you will earn a profit with each offer that you fund as long as the “borrower” pays out as promised.  Importantly, Kickfurther allows funding by credit card (or bank gift card).

More complete info about Kickfurther can be found in these prior posts:

• My half-baked Kickfurther Review.
• Kickfurther review 2. Manufacturing profit and spend.

The process for liquidating gift cards through Kickfurther is very similar to Kiva:

1. Add Funds.  After logging into KickFurther, go to “My Account”, then select “Add Funds”.  Select “Credit Card or Bitcoin”.  Enter the amount to add.  Unlike Kiva, Kickfurther requires whole dollar amounts when adding funds this way.

2. Fund a KickFurther Consignment.  Funds cannot be withdrawn until they have been used to fund a consignment and then paid back.

3. Withdraw payouts.  Once consignments pay out, you can withdraw funds to your bank account.  Regardless of how you funded the original consignment, you will pay a 1.5% fee to withdraw your money.  This effectively reduces your profit by slightly more than 1.5 percentage points (since the 1.5% fee is assessed against the entire balance, including your profit, not just the original investment).  For example, if you invested $100 on a 10% profit consignment, then your final balance should show $110.  When you withdraw, you’ll be assessed a 1.5% fee on $110 = $1.65.  Your final profit in that example will be $8.35 (8.35%).

Advantages

• Potentially earn a nice profit.
• Very easy way to drain gift cards from home.
• Works with all forms of bank gift cards: Visa, MasterCard, Amex*, etc. Also works with virtual gift cards.

Disadvantages:

• Money inaccessible for many months.
• No guarantee of pay back.  I hope to report on my results to-date soon.  I think that I’m doing quite well, but KickFurther’s reporting features are abysmal, so it’s hard to know for sure (especially since most of my consignments are still in-progress).
• Opportunity cost.  Kickfurther can also be funded by credit card.  I usually use my Citi AT&T card which gives me 3X points for “online purchases,” including payments to Kickfurther.  So, when I fund consignments with gift cards, I am losing out on 3X rewards from my Citi AT&T card.

As with Kiva, I love being able to easily drain gift cards from home so, for me, the advantages outweigh the disadvantages.

* In my experience, Amex gift cards don’t work as well as Visa or MasterCard gift cards when used with Kiva or Kickfurther.  With Kiva, you may have to call Amex to register your name and address to the card in order to get the payment to go through.  With both Kiva and Kickfurther, there will be a $1 hold on the card that prevents it from being fully drained (actually I saw two $1 holds when using Kickfurther).

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