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Maximizing Points from Gift Cards

Greetings from the ANA Lounge at Tokyo-Narita Airport! I’m in the middle of an LAX-Singapore flight on Singapore Airlines in Economy Class on their A380. After having flown all business and first class this year, I was wondering how I’d react to sitting back in coach for a long-haul. Singapore’s A380 product is amazing, even in coach, and the flight so far has been amazing. The only annoying part is that I’m probably part of the only travel party without a kid under age 5. Earplugs to the rescue.

As for how I got into the lounge: earlier this month, I was able to match my Delta Gold status to Turkish Elite, which is Star Alliance Gold. While I don’t have the card with me, I had a printout of my account and was able to access the lounge in Los Angeles and here in Tokyo. As for the miles, the routing I’m flying on is over 22,000 miles round-trip, so I’m banking the miles to Aegean for multiple years of Star Gold down the road.

Expect a few pictures of the trip down the road. Now, back to the regularly scheduled post:

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One of the ways to maximize points earning is to use credit cards to buy gift cards. A couple reasons for this:

– If you have a spending threshold you have to meet before a certain deadline, gift cards are a way to “spend forward” the money you would otherwise spend later.
– If your card offers multiple-point earnings at a specific type of retailer, you can increase your earnings by buying gift cards there. For example, Chase Freedom had 5x earnings at Grocery Stores from April 1 to June 30. Rather than use a credit card to buy something from Target, where I’d earn just 1 points/$, I bought Target gift cards at the grocery store to earn 5x points.

This scheme is made better in my home state of California, because there’s a law on the books that says that a merchant must cash out a merchant-branded gift card if it holds less than $10. That means that if I have a $50 Target gift card and spend only $40 on it, I can cash out the remaining $10. That cash can be used to pay toward my credit card bill.

In this example, I’d earn 265 points by buying a $50 Target gift card at a 5x merchant (50 * 5= 250, + 10 points per transaction, + 5 points for the 10% base bonus). That’s originally 5.3x/$.

However, if I spend just $40 at Target and cash out the $10, I’ve effectively earned at a 6.625x rate, or 25% higher.

Note that this translates to maybe a few hundred points here and there, but it can be really effective, especially for gift card amounts closer to $10.

This can also be done at other retailers like Starbucks, which sell gift cards for $15. If you’re a Gold Card member, you’ll still earn Starbucks Stars so long as you register the gift cards to your account before using them.

Other states, like Maine/Massachusetts/Montana/Washington have lower thresholds, like $5. Here’s a link to the laws for each state: http://www.ncsl.org/issues-research/banking/gift-cards-and-certificates-statutes-and-legis.aspx

(The native Californian in me will point out that California’s law is the most consumer-friendly ;)).

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