What is gift card churning?
Gift card churning is the art of buying and liquidating gift cards for the purpose of saving money, earning money, earning extra points, and/or increasing credit card spend. Here are a few reasons it may be worth your time to manufacture spend in this way:
- Meet credit card sign-up bonus minimum spend requirements
- Get credit card big-spend bonuses
- Earn extra points and miles thanks to credit card category bonuses and portals.
- Earn airline and hotel elite status (e.g. AA, Delta, United, Marriott, Hilton)
A simple gift card churn involves buying merchant gift cards at a discount, paying with your credit card (to get rewards), and selling the gift cards to either break even or earn a profit.
Gift card churning concepts
- Gift card resellers: Quite a few companies exist as online pawn shops for gift cards. They buy merchant gift cards from individuals at a discount and resell them at less of a discount.
- Gift card marketplaces: Sites like Raise, eSaving, and eBay make it easy for individuals to sell gift cards to each other. SaveYa offers both models: they’ll buy directly from you or let you list your gift card on their marketplace. One advantage of selling through a marketplace is that you can set your own price. Major disadvantages are that these sites take a cut of each sale and you have to wait until your gift card is sold to get paid.
- Bulk sellers: Most resellers have programs that you can apply to if you want to become a “bulk seller”. Advantages to become a bulk seller vary by reseller, but often include better resale rates, higher limits, and better service.
- Upgrade: It is sometimes possible to use a gift card from one merchant to buy gift cards from other merchants. Online, for example, Amazon, eBay, and Target all currently allow buying other merchant gift cards with their gift cards. In-store, unfortunately, many chains have trained cashiers not to allow people to buy gift cards with gift cards. Some physical stores worth trying (but no guarantees) include: Best Buy, Gamestop (although there have been recent reports of some Gamestop stores no longer allowing this), Meijer. Toys R Us no longer works. Sears & Kmart cash registers allow buying merchant gift cards with Sears/Kmart gift cards, but most cashiers have been trained not to allow it.
- Make New: If you buy a gift card from an individual or a reseller there’s always a risk that a previous owner of the gift card still has the gift card number and will use the funds before you do. One way to avoid that is to use the gift card immediately to buy a new gift card of the same type. This is also a way to turn an e-gift card into a physical gift card, which can be handy if your goal is to resell the gift card since some resellers pay more for physical gift cards. Note that not all merchants will let you buy their gift card with a gift card.
- Brand Swap: Often, when a single company owns several merchant brands, the gift cards work across those brands. For example, Sears & Kmart gift cards are indistinguishable. When this is the case, find out which brand is selling for the highest price and sell your gift card as if it is from that brand. Currently, Sears gift cards sell for a bit more than Kmart gift cards, so you could sell your Kmart gift cards as Sears gift cards in order to get a bit more money.
Gift card churning tools
- Gift Card Wiki: This should be your first stop to find out how much second hand gift cards are selling for and how much you can get for reselling yours. The site even lets you sort or filter gift cards by “Arbitrage Rate” which is the % of money you can get back if you buy a gift card at the best current discount and then sell it at the best current resell rate.
- EBay Gift Card Arbitrage Opportunities (Beta) by Money Metagame: This page shows opportunities for buying and selling unused gift cards from eBay.
- Frequent Miler Laboratory: Visit the Frequent Miler Laboratory to learn which portals reward purchases of gift cards (or purchases made with gift cards); which stores let you buy gift cards with gift cards; and more. Please contribute your experiences here too!
- CashBackMonitor: Use this as your go-to site for finding the best portal rewards available for various stores. With Gift Card Churning, this can be valuable in a few ways: 1) sometimes a store will offer large enough portal rewards to be worth buying gift cards directly from the source even if your intention is to resell them; and 2) Gift card reseller sites and marketplaces are sometimes available through portals. A portal rebate as small as 1% or 2% can make the difference between a gift card churn being profitable or not.
- Best options for buying merchant gift cards: This page is updated regularly. It lists a number of ways of saving money and earning rewards when buying unused merchant gift cards. Subscribe to this page by adding a comment (any comment will do) and checking the box that says “Notify me of follow-up comments by email.”
- The Complete Guide to Selling your Unwanted Gift Cards for Cash by Chuck at Doctor of Credit. Read this post for resale recommendations and reviews of each of the major resellers and marketplaces.
Gift card churning issues and risks
A lot can and will go wrong when churning gift cards. I used to churn gift cards several years ago as a way to manufacture spend, but I soon found that the process was so full of issues and headaches that I stopped doing so. Instead, I use many gift card churning concepts as a way of saving money or increasing rewards. Many of these ideas can be found in our Extreme Stacking series.
Here now, in no particular order, are some issues and risks that you may face when churning gift cards:
- Lost in the mail: Many resellers pay more for physical gift cards than e-gift cards, so this means mailing the gift cards to the reseller to get paid. I’ve heard multiple stories of resellers claiming not to have received these mailings. If you insure the package*, you should be able to recoup your losses, but no matter how it is resolved you can bet it will be a major headache. * Note: the only insurance that will work with gift cards (that I’m aware of) is with USPS Registered Mail. Money Metagame has cautions about insuring gift cards here.
- Resale price fluctuations: A reseller may offer you 85% on the dollar for a gift card on one day, but significantly less the next. The possibility of losing a lot of money this way is very real.
- Criminal or accidental reuse: When you buy a secondhand gift card, there’s no way to know who still has the gift card code. The code could easily be used intentionally or accidentally before you get a chance to use it. Or, if you resell the gift card and then the code is used, you may be accused of stealing the gift card’s value.
- Overzealous fraud prevention: I’ve had situations where I sold brand new gift cards to a reseller only to find that their fraud prevention team later cancelled the order. Similarly, attempts to buy gift cards with Visa, MasterCard, or Amex gift cards are likely to be turned down. Even the use of a VPN when buying or selling can be a trigger for the fraud prevention teams.
- Resale limits: Many resellers impose limits in how much they’ll buy from individual sellers, especially those who are not confirmed bulk sellers. So, even if you find theoretically great gift card churns where you can buy low and sell high, you may have trouble unloading all of your gift card inventory.
- Banned second time resales: Some gift card resellers keep track of gift cards they’ve sold before and will not buy the same gift card from you. If you buy gift secondhand gift cards for the purpose of reselling them, it is very likely that you’ll encounter this situation.
For more, please see Shawn’s post at Miles to Memories: Why Gift Card Reselling Probably Isn’t Worth the Time & Effort.
Gift card churning in 2016
Manufacturing spend in order to earn credit card rewards used to be cheap, easy, and reliable. Then, one after another, most cheap and easy options have fallen by the wayside. In the past few years we lost Vanilla Reload cards, Amazon Payments, REDbird, and much more.
In the meantime, gift card churning has become significantly easier. EBay, for example, has eased previous gift card limitations yet continues to allow buying gift cards with gift cards, and often hosts great sales of unused gift cards. And Amex has continued to offer terrific Amex Offers which can frequently be used to buy new gift cards at a huge discount if you have access to a large number of Amex cards (including authorized user cards).
The biggest improvement of all, I think, is the development of the Gift Card Wiki site which seems to be custom built for gift card churning. The site includes detailed resale information including how much each reseller will pay if you upload gift card codes rather than mailing in physical gift cards:
And, for those willing to risk buying and reselling secondhand gift cards, they’ll let you sort gift card views by arbitrage rate. It doesn’t get any easier than this to find gift card reselling opportunities in which you can theoretically earn a profit:
Similarly, the EBay Gift Card Arbitrage Opportunities (Beta) page by Money Metagame makes it easy to find arbitrage opportunities for new, unused gift cards. Buying new helps to avoid the many issues associated with buying used gift cards.
As a result of the ever declining manufactured spend opportunities, and improved access to gift card reselling opportunities, gift card churning is likely to lure in more and more people. And, as you compete with ever more people to resell the same types of gift cards, you’ll be more and more likely to be stuck holding the gift card bag. That is, you’ll have bought low with the intention of selling high, but the resale price in the interim will plummet.
Personally, despite the changing landscape, I’m still not interested in gift card churning in large volumes. There is too much risk and, often, too much work, for too little gain. To the extent that I gift card churn at all, I primarily focus on opportunities for buying brand new gift cards at a large discount. And, I usually use these to save money rather than to resell those gift cards.
That said, I know people who churn gift cards regularly, successfully, and in high volume. Just like reselling merchandise, there is a fairly steep learning curve, but there are great opportunities out there for those willing to put in the work and accept the risk.