Discounted Gift Cards for Online Arbitrage: Safe Sources

1. What a Discounted Gift Card Does to Your Buy Cost

A discounted gift card is store credit you bought for less than its face value. Pay for inventory with it and you lower your cost on every unit in the order, on top of whatever sale or coupon the retailer is running.

The math is simple. Your effective cost is the item price times what you paid for the card divided by the card's face value. Made-up numbers to show the formula: pay $95 for a $100 card, buy $100 of inventory with it, and your real cost is $95 before cashback.

In online arbitrage that gap can move a lead from "skip" to "buy." It can also hand your money to a scammer if you buy the card from the wrong place. Both sides get covered here.

2. Why Sellers Stack Gift Cards on Top of Sales

"On Tactical Arbitrage, we're going to go to the settings and we are going to actually manufacture our margins with cash back and gift cards. Right? And to do this, you go to settings, searching and price adjustment right here."

How I Use Tactical Arbitrage to Find Amazon Products

"Manufacture your margins" is the right way to think about it. The Amazon side of a deal is out of your hands. The buy side has levers: the sale, the coupon, the cashback portal, the credit card, and the gift card.

Each lever is small. Stacked, they turn a 22% ROI lead into one that clears your floor. The full stacking order lives in the cashback stacking guide.

3. Legit Places to Buy Discounted Gift Cards

You have two clean sources and one gray one.

• The retailer itself. Some stores run their own gift card promos, like bonus credit when you buy cards or a discount on their own cards during an event. The card comes straight from the issuer, so the fraud risk is close to zero. The catch: these promos come and go, and the terms change every time. Read the fine print on that promo, not last year's.
• Gift card exchanges. Sites like CardCash buy unwanted cards from people and resell them below face value. You get a discount. You also take on the risk that the card's history isn't clean, which is why you read the exchange's guarantee page before you buy anything.
• Individuals on auction and classified sites. This is the gray one. Skip it. The next two sections explain why.

Discounts vary by brand, by week and by how many cards are in supply. Check the live price on the day you buy and run it through your numbers.

4. The Fraud Risk Is Real

Gift cards are a favorite tool for scammers because they move like cash. The FTC tells shoppers to buy cards only from retailers they trust and to stay away from sellers on online auction sites, because those cards may be fake or stolen. That warning is on the FTC's gift card scams page.

A stolen card works fine until the real owner reports it or the issuer catches the fraud. Then the balance disappears, sometimes after you've already placed orders with it.

For an OA seller, that's worse than a lost discount. You could lose the balance, the inventory order tied to it, and the time you spent sourcing the deal.

5. Issuers Can Close Cards From Unauthorized Resellers

Read the issuer's gift card terms before you buy a discounted card for that store. Some issuers say outright that they don't authorize third-party resellers.

Whole Foods is one example. Its gift card terms recommend against buying discounted cards from third-party resellers, name Craigslist, eBay and Raise.com, say those resellers are not authorized, and warn that such cards may be closed at any time. The same terms say the issuer doesn't permit resale of its cards without written consent.

Every retailer writes its own terms, so one store's rules don't tell you about another's. Check the issuer for each store you plan to buy from. If the terms say cards from unauthorized resellers can be closed, a discount from an exchange is a bet on that card staying open.

6. How to Check a Gift Card Source Before You Buy

Run this list every time, even with a source you've used before:

• Read the issuer's terms. Look for language on resale, unauthorized sellers and closing cards.
• Read the seller's guarantee. If you use an exchange, know what it covers, for how long, and what proof it wants.
• Check the balance on the issuer's site right away. Don't wait until checkout day.
• Keep the receipt and a photo of the card. The FTC recommends both, since the card number and receipt help if you need to report a problem.
• Spend it soon. A card you hold for weeks is a card that can get closed before you use it.

Buy small the first time with any new source. One card, one order, confirm it ships. Then scale.

7. A Gift Card Balance Is Cash Locked to One Store

A $500 balance at one retailer only buys inventory from that retailer. If the deals dry up or the store cancels your orders, the money sits there.

That's a cash flow problem. OA lives on turning money fast, and dead store credit slows the whole cycle. Only load cards for stores where you already have leads lined up, and only for the amount you plan to spend this week.

Retailers also cancel OA orders for their own reasons: quantity limits, address flags, payment reviews. A canceled order on a store you pre-loaded leaves you holding credit with nothing to spend it on. Test a store with a normal order before you commit gift card money to it.

8. Stack Gift Cards With Cashback and Your Credit Card

"Number two is debatable whether you want to use it or not but we are going to use it in that case. We are going to use store discounts, cash back, and gift cards."

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Chris calls it debatable for a reason. Gift cards add a step and a risk. Some sellers skip them and stick to sales, portals and cards.

If you do use them, the order matters. You buy the gift card with a cashback credit card, then go through a cashback portal to the store, then pay with the gift card. Whether the portal pays on an order paid with a gift card depends on that portal's terms, so check them. Our cashback sites breakdown and credit card guide cover those layers.

9. Put the Gift Card Discount Into Your ROI Math

Enter the discount in your sourcing tool as a price adjustment so every lead shows the real buy cost. Tactical Arbitrage has a price adjustment setting for this. In a manual calculator, lower the buy cost by the same percentage.

Then hold the lead to your normal floor. A gift card should make a good deal better. It shouldn't rescue a lead with weak sales or a crowded listing. See the OA ROI minimum guide for where to set that floor and the ROI formula for the full fee math.

If you want to watch this math run on real leads, grab a seat at the Thursday training.

10. Black Friday Timing for Gift Card Buys

Black Friday is November 27 this year and Cyber Monday is November 30. If you load cards the week before, do it with a plan.

Know which stores you'll buy from and about how much before you buy a single card. Retailers announce their Black Friday deals early, so build the target list first. The Black Friday sourcing guide and the Q4 sourcing calendar help you map it.

Remember the Amazon side too. Inventory you buy on Cyber Monday still has to get labeled, shipped and checked in, and the fees on that unit don't change because your buy cost dropped.

11. Know What to Buy Before You Load a Card

A gift card discount is worthless without a lead to spend it on. The hard part of OA is still finding products that sell.

One shortcut is watching what other sellers buy. Chris built Arbitrage Stalker to track competitor storefronts and alert you when they add a new product, so you see which stores and brands are producing deals right now. That tells you which store's gift card is worth buying. The manual version of the method is in the storefront stalking guide.

Check eligibility before you buy too. A cheap card spent on a brand you can't list is a loss. The brands to avoid list is a good filter.

12. Next Steps

Gift cards are one layer of the buy-cost stack. These posts cover the rest:

• Cashback Stacking for Online Arbitrage - the order to stack sales, portals and cards
• Best Credit Cards for Online Arbitrage - the card you buy gift cards with matters
• OA ROI Minimum - the floor every discounted lead still has to clear
• Black Friday Sourcing for Amazon - where to spend that credit on November 27
• Ulta Online Arbitrage - a beauty store where gift set deals stack well in Q4