Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective. Terms apply to offers listed on this page. Read our editorial standards.
- I have credit cards that offer 5% cash back on rotating categories, but don’t always shop at those stores.
- To take advantage of the deal, I buy gift cards using my credit cards so I can lock in the savings for future purchases.
- I have a system for cataloging which gift cards I have and how much is left on them.
As inflation hits a 40-year high and the cost of many goods and services continues to climb, I’ve been looking for ways to stay on budget. On top of my usual strategies for navigating leaner times (like dialing down discretionary spending and negotiating deals wherever possible), I’m increasingly using credit card bonus categories and cash back offers to save on essential purchases like gas and groceries, and even non-essential purchases like dining and travel.
I don’t always prioritize maximizing credit card rewards in normal economic times, but trimming a few percent from each transaction becomes more enticing as prices go up. Here’s how I do it.
15.49% – 25.49% Variable
Good to Excellent
16.49% – 25.24% Variable
Good to Excellent
16.49% – 25.24% Variable
Good to Excellent
My first step is having the right credit cards
Having credit cards that earn more than the standard 1 or 2 points per dollar is essential to my strategy. Among my portfolio of credit cards, I have many that offer bonus points on select transactions. For example, my Chase Freedom®
card earns 5% cash back on up to $1,500 of spending in rotating quarterly bonus categories — for Q3 of 2022, those categories are gas stations, rental car agencies, movie theaters, and select live entertainment.
Earning 5% back is easy when my shopping needs align with the available bonus categories. If I want to earn 5% back on gas purchases this quarter, I just use my Chase Freedom® card and I’m done. The real trick is getting a similar return when the bonus categories don’t match what I need to buy. To do that, I have to get creative.
Buying third-party gift cards
Retailers commonly sell gift cards for use in their own stores, but many also sell gift cards you can use to shop elsewhere. Go to your local Home Depot, Kroger, Bed Bath & Beyond, or other major retail outlet, and you’ll likely find racks of gift cards for everything from pizza joints, coffee shops, and streaming services to pharmacies, wireless providers, and airlines. Paired with lucrative credit card bonus categories, these gift cards create an opportunity to boost my return (and thereby cut costs) on a wide range of purchases.
Using gas again as an example, my wife and I mostly fuel up at the Shell station a few blocks from our house. I can buy Shell gift cards at a variety of stores, including Walgreen’s, Safeway, Best Buy, and most notably for my purposes, Staples and Office Depot.
Since I have a Chase Ink Business Cash® Credit Card that earns 5% cash back at office supply stores, I can buy Shell gift cards at Staples or Office Depot and lock in that higher return for future gas purchases. That means I earn 5% back on gas all the time, not just when it’s offered as a rotating bonus category.
This strategy extends to other purchases. Plenty of merchants we do business with have easy-to-find gift cards, including Amazon, Target, Safeway, Lowe’s, REI, eBay, Best Buy, Airbnb, Guitar Center, and more. Many of these merchants aren’t normally included in credit card bonus categories, even rotating ones. Buying gift cards from a store that is eligible allows me to circumvent the limits of those bonus categories and extend my savings to a broader range of purchases.
Other strategies I use to save on gift cards
Opportunities to save go beyond credit card bonus categories. Most major credit card issuers have targeted offer programs (such as Amex Offers** and Bank of America’s BankAmeriDeals) that provide personalized discounts or bonuses for qualifying purchases. Many of these are for items I have no interest in and will never buy, but I routinely find useful offers that can defray the cost of planned purchases.
For example, my Amex Platinum Card currently has an offer for $10 back on purchases of $100 or more at supermarkets; the offer can be used three times, for a total of up to $30 back.
I rarely spend $100 in a single grocery trip, and I do the bulk of my food shopping at our local co-op, but the Safeway near my house sells a variety of third-party gift cards. With this Amex Offer, I can get a 10% discount on future purchases at many of the merchants mentioned above.
Another way I save is to look for discounts or bonuses on gift card purchases. For example, Best Buy might offer a 10% discount on Netflix gift cards, or Lowe’s might offer a bonus $15 Lowe’s gift card to customers who buy a $100 third-party gift card. So long as the eligible gift cards are ones I’ll use, the discount or bonus is as good as cash to me.
Finally, I keep an eye out for deals on prepaid Visa, Mastercard, and Amex gift cards, which I can then use just about anywhere that accepts credit cards. These prepaid cards typically tack on a purchase fee, but Staples and Office Depot (among others) frequently offer promotions that waive those fees, meaning I can buy them at no additional cost while earning 5% cash back on my Chase Ink card. I then use the prepaid cards on purchases where I would earn fewer rewards otherwise, like at my gym or auto mechanic.
I stack savings for an even bigger net discount
One great aspect of these strategies is that they can be combined not only with each other, but also with other savings and rewards like online shopping portals and member discounts. One recent example is a sale Staples had in early July on several brands of gift cards, including $100 Airbnb gift cards for $90. By paying with my Chase Ink Business Cash® Credit Card, I earned an extra 5% ($4.50) back, giving me a total discount of 14.5%.
Another common example is using my Shell Fuel Rewards membership to save 5 cents per gallon on top of whatever discount I’ve gotten on my Shell gift cards. There are lots of creative ways to stack, depending how much effort I feel like putting into it.
The downside of gift cards
Speaking of effort, when I consider a way to save money, I try to look at the big picture. Saving money is great, but at what cost?
First and foremost, I’m protective of my time. Saving a few bucks isn’t personally worthwhile if I have to squander significant time in the process, so I’m mindful of how long I spend taking advantage of deals. If I can save by purchasing a gift card online or tossing it in my cart when I’m already at the store, that’s an easy win. If I have to go out of my way, then the savings need to be commensurate with the extra time spent.
Part of that calculation is the time I put into keeping my gift cards organized. I used to just toss them loose in a box, and while I don’t think I ever threw out a loaded card, I can’t say for sure. Now I have a system for cataloging gift cards when I get them and disposing of them when they’re drained. It doesn’t take long, but ignoring the time I spend on that extra step would yield a dishonest accounting of my process.
The system I use to keep my gift cards organized
There are two parts to my system. One is keeping them physically organized; to do that, I use a cardboard box that I think is meant for storing baseball cards. I arrange them alphabetically by brand so they’re easy to find and all cards of the same brand stay together. I used to keep them loose in a box and I’d forget about some of them or not realize I had multiples for a single merchant, so I wouldn’t use them together when the opportunity arose.
The other component to my organization is keeping track of their value, which I do on an Excel spreadsheet. When I buy a gift card, I note the brand, the dollar amount, the date of purchase, and the gift card number/PIN where applicable. This helps me track partial balances, and is useful if I ever do misplace a gift card or have to return an item I used a gift card to purchase. Once a gift card is drained and I’m confident I won’t need it again, I move it to a different tab on the spreadsheet.
Apart from the effort I put into buying gift cards, I try to keep in mind a few potential pitfalls. First, shopping with a gift card means I can’t rely on benefits like purchase protection or return protection that I get when I use a credit card. That’s not a problem for purchases I consume quickly, like gas or groceries, but it’s a concern for goods like electronics or household items, or anything I might want to return, since funds typically go back to the original method of payment. The less certain I am of a purchase, the less inclined I am to use a gift card.
Next, gift card purchases are generally reliable, but not infallible. Sometimes cards don’t activate properly, or they’ve been compromised and the balance is drained as soon as they’re loaded. Both scenarios have only happened to me once, but getting my money back was a hassle in each case.
Gift cards may also have unexpected rules or limits on redemption, such as the Shell station I frequent only accepting gift card payments inside, not at the pump. That adds time to the fueling process, which I have to factor in as discussed above.
Finally, like the gift cards themselves, the rewards or discounts I expect to earn don’t always work out as planned. For example, the terms of the Amex supermarket offer described above specify that gift card purchases don’t qualify. I know that in practice third-party gift cards do trigger such offers, but there’s always a chance I won’t get that extra cash back.