Buy a huge gift card with your rebate?
April 29th, 2008 | by
mbhunter |
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Retailers are lining up with carrots to help you put your economic stimulus check to good use. For large gift card purchases at stores like Kroger, Sears, KMart, and others, the retailers will kick in extra value on the gift card: up to 10% above what you pay for.
Is this opportunism on the part of retailers? Absolutely. Once the money has gone from your wallet to their coffers, it’s stuck with that retailer. The card might be assessed a fee if it’s not redeemed promptly, or it might become worthless to the purchaser if it’s lost or if the company goes out of business.
Liz Pulliam Weston advises people not to buy these refund-season gift cards, for these and other reasons, and it’s solid advice as usual. She warns that by using the entire check to buy a gift card “you could be blowing your chance to get ahead,” and it’s absolutely true. $600 is a decent emergency fund, or a nice “snowball” to throw at a credit card balance.
If the only retailers participating were the ones she mentioned in the article, I probably wouldn’t bite, simply because the stores aren’t nearby or they’re stores that we don’t normally shop at. Additionally, if the store requires a purchase of a $600 gift card to get the extra $60, I couldn’t even sell it on eBay — they have set a limit of $500 face value on gift card sales because of widespread fraud.
But when she mentioned that Wal-Mart might be announcing a similar deal in a few days, that got my attention. We do quite a bit of shopping at Wal-Mart, and $600 would probably last us only through the summer, if that. If Wal-Mart wants to give me an extra $60 or even an extra $30 for my $600, I know we’ll go through it. That’s a pretty good return on money I’d spend there anyway. It’s an extra tank of gas in my Corolla.
So am I saying that you should run out and get one of these gift cards? Not necessarily. Look at your finances, and if your ducks are in a row — meaning that you have a good emergency fund, no consumer debt, and your retirement and college savings are on track — then look for gift card deals that present a good value for money that you’d probably be spending anyway. But If you see that there are weak spots in your finances, then check out these wise ways to use your $600 and try one of those instead.
Let retailers compete for your business if it’s to your advantage, but if it’s more to your advantage to keep the check, then do that instead.
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12 Responses to “Buy a huge gift card with your rebate?”
By Eric N. on Apr 29, 2008 | Reply
If what I hear is correct (and I might be bursting bubbles here, including mine), “Wal-Mart (boooo) will cash your rebate check for free, saving you $3. No purchase necessary.”
This is quoted from the Wisebread blog (not sure if links are allowed).
By mbhunter on Apr 29, 2008 | Reply
Hah — if that’s all it is, then that isn’t much. I really don’t know what the deal from Wal-Mart is.
By Eric N. on Apr 29, 2008 | Reply
I know….I would be sorely disappointed if that’s there only promotion since Wal-Mart is by far where I spend the most money.
By James on Apr 30, 2008 | Reply
Whenever I hear someone talking about how they are going to spend their rebate on something silly like going out to eat or buying things at wal-mart, I want go and bang my head against a wall.
Instead, I feel very strongly that people should be saving their money, investing it, or using it for debt reduction.
The USA needs more old fashioned fiscal prudence and less consumerism.
Thanks,
james
By mbhunter on Apr 30, 2008 | Reply
James: We buy groceries at Wal-Mart. Though I suppose I could eat less.
By Jeremy on Apr 30, 2008 | Reply
Kroger, one of the companies offering the 10% gift card bonus, is only using $330 dollar gift cards out. So if you have $600 refund check, you’d receive 2, $330 gift cards.
But remember, gift cards are like cash at most stores, so converting them to smaller gift cards, and not carrying one large amount is probably a prudent thing to do to protect yourself.
One of the largest advantages of these gift cards in my area, is that my Kroger sells gas.. and as we all know, at $3.60 a gallon, it doesn’t take long to go through that gift card, making the return on investment a great deal.
By Becky@FamilyandFinances on Apr 30, 2008 | Reply
I buy groceries at Walmart, too, so I would definitely cash it there if they give a bonus. Otherwise, it’s better to put the Walmart groceries on our credit card and earn 1%
By Movingonup! on Apr 30, 2008 | Reply
I can’t wait to send my $600 to my credit card! Walmart’s not taking my money.
By James on Apr 30, 2008 | Reply
MBH,
Thats different. Its cool to buy groceries, otherwise how can you live?
I’m talking about getting silly things like DVDs or plastic ponies or cheap cardboard furniture thats going to fall apart in 6 months. - that stuff drives me up a wall.
Plus, I think the pres is doing a great disservice when he says Americans should “go shopping” - instead they should be paying off credit card debt or socking the bucks into a savings account.
Consumerism sucks and its bad for America. Its the reason why the chinese are kicking our butt right now.
Best,
James
By mbhunter on May 1, 2008 | Reply
Jeremy: That would be convenient if the cards could be split up like that.
By philip on May 1, 2008 | Reply
I see the possible problems here, but to get an immediate 10% return on an investment is GREAT. I do not consider that I am buying gift cards as much as getting a loan that PAYS ME! I figure I can go through the $660 in groceries and gas in about 2-3 months.
I do still agree with everyone that simply getting a card at merchandise stores is generally a poor idea unless it is to immediately purchase an item you were going to buy and have saved up for anyway.
By "Mo" Money on May 1, 2008 | Reply
I think if you are going to spend the money on an item whether it be food at Kroger’s or necessities at Wal-Mart, you should take the 10%. Some one already said get the gift card and spend it on groceries and put your monthly grocery money into your savings or to pay off debt. 10% is a good return and should not be ignored.