My Amex gift card strategy

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Last year, I signed up for the Amex Gift Card Premium Shipping Plan which offers free Express Next Day shipping on all Amex gift card orders.  Usually, the plan costs $99 per year, but thanks to a tip from a friend, I signed up for free.  Since then, I’ve been able to get free money, in a way, by clicking through cash back portals to buy Amex gift cards.  Cash back rates have hovered at 1.5% for quite a while now, but they regularly spike up to 2% or even 2.25% during one-day specials on sites such as TopCashBack, BeFrugal, and Simply Best Coupons.  Each Amex gift card has a $3.95 fee, but when buying large denomination cards (e.g. $2000), the fee (0.2%) is trivial as a percentage of the card’s total value.

Yesterday, my free enrollment expired:

Amex gift card strategy

How to check your plan status

It isn’t obvious how to check the status of your free shipping plan, but its easy once you know how:

  1. Log into your online Amex account
  2. Scroll to the bottom of the page, and click on “Gift Cards”
  3. Click “My Orders”
  4. Look a the section titled “Shipping Addresses”.  To the right, you’ll see your shipping plan status along with a link to View details.

Amex gift card strategy

Problems with Amex Gift Cards

Amex gift cards are not all sunshine and roses…

  • Portals don’t always track purchases correctly.  In fact, for my last four orders through TopCashBack I’ve had to submit missing cash back claims. Fortunately, each was resolved quickly in my favor.
  • Amex declines orders for no apparent reason.  They’ll send an email with the subject heading “Your order has been declined”.  The usual reason: “We could not verify the information you provided.”  That’s a particularly strange reason when the person ordering had logged into their Amex account and used their free shipping plan to place the order.  For me, that problem has gone away ever since I started using a real EIN as the Tax ID when placing Business Gift Card orders.  You can easily get your own EIN here.
  • Amex occasionally withdraws Amex gift cards from portals.  Often, around the September or October, Amex Gift Cards disappear from portals then appear again a few weeks later, sometimes at a lower cash back rate.
  • Amex sometimes screws up. 
    • Sometimes people receive gift cards that haven’t been properly activated.  Then, when calling Amex, the reps claim that the cards have to be swiped in-person to be activated.  That’s completely wrong.  If this happens to you, keep calling and asking for supervisors until you get someone who knows how to fix the issue.
    • I received an error recently on the website when placing an order, so I tried again.  The second order went through successfully.  The first order didn’t track through the portal, but it did result in cards showing up at my door and my credit card being charged.  It took three separate time consuming calls to get the duplicate order cancelled and my money refunded.
  • Some credit cards charge cash advance fees: This used to commonly happen with Citibank cards, but Citi seems to have fixed the issue.  To be safe, it’s a good idea to decrease your cash advance limit to zero, or at least to less than the amount of your Amex gift card orders. Unfortunately, with some banks (Discover and US Bank, for example) this could result in your order getting declined even if the purchase wouldn’t ultimately result in a cash advance fee.
  • Registering cards for online orders can be a pain.  Some online merchants will try to verify your billing address by comparing to the info registered to your credit card.  This can cause orders placed with Amex gift cards to fail.  A fix is to call Amex to register your address to the gift card first.  This can be extremely time consuming.  I really wish they would add an online option for registering!
  • Some merchants won’t accept Amex gift cards.  Simon Mall employees have been told not to accept Amex gift cards for purchasing Visa gift cards.  At local stores that sell Visa gift cards, success can be hit or miss.  Online, neither GiftCardMall (which has become irrelevant recently since they dropped their max Visa gift card values to $250) nor GiftCards.com accept Amex gift cards.  And, of course, there are places that don’t take American Express at all.
  • $1 holds can make the cards difficult to drain completely.   This is usually just an online purchase problem, but it is a hassle.  One example is with Kiva loans which can be paid for with Amex gift cards.  If you try to make exactly $2000 worth of loans, for example, and pay with a $2000 Amex gift card, the transaction will be declined.  The reason is that PayPal will first verify the card by placing a $1 hold.  This reduces the available balance on the card to $1999 for quite a while (its been a while since I’ve done this, but my admittedly shaky memory tells me that I’ve had to wait up to a week for the hold to clear).  Read more about Kiva here: Kiva: loans, points, and miles.
  • REDbird no longer likes Amex gift cards.  For about 7 months, it was possible to reload REDbird (the Target Prepaid REDcard) with a credit card at Target.  As of May 6th 2015, though, only debit cards or cash can be used.  And, Amex gift cards are not debit cards.

Despite the issues, I’m a fan

In the post “REDbird grounded. Now what?” I described how I would deal with Amex gift cards I had on hand:

While writing this, the UPS guy showed up at my door with a big pile of Amex gift cards that I had ordered on Tuesday when TopCashBack offered 2.25% cash back.  The original plan was to use these to load REDbird at Target.  That plan is now out the window.  Fortunately, I have an easy alternative.  I’m aware of a few stores in my area that will let me buy $500 Visa gift cards and pay with Amex gift cards.  Sure, I’ll incur a fee for each gift card of around 1%, but its well worth it – it simply eats into my 2.25% portal earnings.  It’s a bit more work, but I’ll still be well ahead.

Note that this solution is extremely location sensitive.  There are stores in my town within the same chain that do not allow Amex gift cards as payment.  And, I’ve heard from some readers that wherever they live they’ve been unable to find stores that accept credit card payments at all for gift cards, let alone Amex gift card payments.

So, the cards on hand weren’t a problem for me, but I also declared my intention to stop buying Amex gift cards:

Going forward, rather than buying Amex gift cards, I’ll buy $500 Visa gift cards.  Unlike Amex gift cards, Visa gift cards can be used as debit cards to load REDbird.  Done.

Since then, I’ve changed my mind.  I’ve been fortunate in that almost all Target stores in my area have continued to allow Visa gift card debit loads to REDbird.  So, draining Amex gift cards has been fairly easy: 1) I use Amex gift cards to buy Visa gift cards at local stores; and 2) I use those Visa gift cards to reload REDbird at Target.  Then, of course, I use REDbird’s free bill pay feature to pay bills that can’t usually be paid by credit card.

There are two killer features of Amex gift cards that make it worth it, to me, to add the extra step:

  1. I can meet minimum spend requirements instantly and from home.  This is huge to me.  When I sign up for a new credit card that has a spend requirement for its signup bonus, I can simply click through a portal to Amex gift cards and buy as many Amex gift cards as are needed to meet the spend requirement.  Done!  Sure, I then have a longer term issue of dealing with the Amex cards, but there is no longer any fear of missing out on the signup bonus.
  2. Portal rewards wipe out fees associated with manufacturing spend.  Buying Visa gift cards involves fees.  Liquidating Visa gift cards sometimes involves fees.  Cash back earned from purchasing Amex gift cards via a portal is usually more than enough to cover those fees and probably the cost of gas too (for driving around from store to store).

Maybe not for you?

My ability to liquidate Amex gift cards is extremely location sensitive.  There are stores in my town within the same chain that do not allow Amex gift cards as payment.  And, I’ve heard from some readers that wherever they live they’ve been unable to find stores that accept credit card payments at all for gift cards, let alone Amex gift card payments.  And, even if you can turn Amex gift cards into debit gift cards, you may live in an area where those are hard to use too.

As a general rule, I’d recommend that you make sure that you have at least two different ways to drain gift cards before investing too heavily in them.  Options disappear all the time.  If you can’t afford to be stuck holding the cards long term then don’t buy them.

Should I renew premium shipping?

Now that my premium shipping plan has ended, I need to make a decision.  Should I pay $99 to renew the premium shipping plan?

Amex gift card strategy

Without the plan, I’d have to pay $8.95 per order for shipping.  If I place 11 or fewer orders in the next 12 months, I’d be better off paying separately each time.  If I place 12 or more orders, then I’m better off with the shipping plan.  My guess is that I will place 12 or more orders, so I should go with premium shipping.  However, there are a few risks:

  • Amex gift cards may disappear from portals as they’ve done in the past. And, there would be no guarantee that they would return.
  • Portal rates on Amex gift cards may drop to rates that are too low to be worth the effort.
  • Options for liquidating Amex gift cards may dry up.
  • A free shipping code might surface again.

All of the above are reasons to pay for shipping per order, for now, rather than paying all at once.  On the other hand, I think that the risks are low and savings would add up if I buy gift cards often enough.  So, my plan is to wait until the next time I want to buy gift cards.  I’ll sign up then for premium shipping as part of my next order.

Questions about Amex gift cards?

Please see: The complete guide to Amex gift cards.

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