Lazy Man and Money

Gift Cards: A Guaranteed 20% Return on Your Money?

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Over the last few years, I’ve noticed that more and more companies are pushing their gift cards over the holidays. Gift cards are a great deal for businesses because they get to book the revenue now… and if they are lost, forgotten, discarded, they don’t have to give up the product or service. This is often called breakage. [It seems I was wrong about them being able to book the revenue now. They have to wait until the gift card is spent. Makes sense because having the money out there would be a matching liability I guess. Anyway an accountant made the point that does look good for the cash flow statement.]

The problem is that consumers only have so much money to spend over the holidays. This leaves businesses competing with each other for your gift card budget. And to borrow a slogan from Lending Tree, “when businesses compete you win.” In this case, businesses have been giving more value for their gift cards, such as giving someone a free $5 gift card if you buy a $25 one. Or they may just discount the gift card. I’ve noticed that $50 iTunes gift cards can be bought for around $40 at some places. Finally, they may give you a free meal (Taco Bell is giving two tacos and a drink for instance).

Whatever the deal is, you stand to gain, if you realize something very simple. You don’t have to give the cards, you can use them yourself throughout the year. So if I was going to spend $20 at Taco Bell in the next year, why wouldn’t I just buy the gift card and get a free lunch worth around $4? Sure, I take the risk of losing the gift card (at least it’s a risk that I can control) and I’m giving up the money now… but I’m effectively locking in a 20% gain on my money (in the form of the free lunch now).

One of the other things that you might not realize is that gift cards aren’t promotions. They are as good as cash. So they can be stacked with other coupons and promotions. I’ll give you a real world example of how I used this to my benefit recently.

I buy my dog’s pet food from Petco because they have some super organic stuff that I can’t find in my typical grocery store. I’m pretty sure it’s grown on a cloud above a rain forest… and unicorn meat is involved as the 3rd ingredient. I may have some details wrong there, but the point is that it can be a little expensive. (And yes the point of me mentioning Taco Bell for myself and this food my dog is not lost on me.) Anyway, I noticed that I could buy Petco gift cards for 26% off. For example, right now I see a $239.70 gift card for $177.38. Yes, I’ll take the $60 if you are just going to hand it too me. Since the gift cards are as good as cash, I can still use the 10% coupon I have and the $5 Petco Rewards they gave me. Combine them all and suddenly unicorn meat prices come a lot closer to penguin meat prices.

A couple of weeks I jumped on an Applebee’s $50 gift card for $40. That 20% savings is usually my sweet spot. Sure I’ll take less than that if it’s something I know I’m going to a lot of (Amazon, I’m looking at you), but those deals can be rare. If you have an Entertainment book that includes Applebee’s there’s nothing wrong with using that coupon with the gift cards you bought.

I have one warning of caution. Businesses are getting wise to this trick and are starting to offer a “bonus card” as the extra perk. This bonus is not a true gift card. Sometimes it expires quickly. Sometimes it can’t be used with other coupons. It can dilute the value the deal a bit depending on your use.

Are there any gift cards that you stock up on during the holiday season to use throughout the year? Let me know in the comments.

Ten Things I Think I Think (and Personal Finance Links)

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  • Grocery Store Thanksgiving – I think that there’s tremendous value in going with a prepared dinner from a grocery store. Our local Safeway store had a $40 turkey dinner that included stuffing, mashed potatoes, gravy cranberry sauce, etc. Since it was my wife and I and some other friends who didn’t have local family there wasn’t a “tradition” to uphold. Everyone agreed that it was a great meal, but my wife who loves to entertain, was most excited about being able to enjoy the holiday instead of putting 100% of her attention on making sure that there were no hosting hiccups. I enjoyed being able to watch the football game instead of having to help with the preparations.
  • More Cable Box Fees Commentary – I think that if you were interested in how how I ditched my cable box fees last week, you might be interested in a few updates I made to it. The product I bought turned out to be a bust, but another product (SiliconDust HDHomerun Prime) went on sale. I bought that one and I’m getting the cheaper version. If you combine it with the Google Offers deal today for $40 at NewEgg for $20 you can save probably another $20 (it should stack). Even if you aren’t interested in that particular gadget, the NewEgg deal is a good one if you like electronics.
  • Social Deal Sites Comeback – I think social deal sites like Groupon and Living Social are making a comeback. Interest in such sites have been waning because the deals aren’t so hot and the type of items can get repetitive (I’ve been offered a billion deals on massages for example). There’s the aforementioned NewEgg deal. However, I’m more excited to for the Groupon deal this weekend that offered $20 worth at Old Navy for $10. Old Navy has good prices on jeans and they fit me well, so I’ll make a frugal purchase even more frugal.
  • Gift Card Bonus Deals – I think that I love this year’s new gimmick to get me to buy gift cards. Taco Bell and Panda Express are restaurants in my area (perhaps nationwide) offering a free meal when you buy a gift card of around $20. Typically that comes out to a $25 value for $20. If you buy that with a credit card that gives you rewards and you can get almost 30% off. In the case of Taco Bell, you could combine that with their Fresco Menu for a relatively healthy meal for a low-low price. Readers, I’d appreciate it if you’d drop in the comments if you’ve seen this at other establishments.
  • Small Business Saturday – My wife and I participated in Small Business Saturday enjoying a good breakfast and getting a little holiday shopping done. We spent more than the $25 reimbursement that AMEX was offering, but supporting a local small business is worth spending a little extra money on.
  • Movie Review of the Week: Twilight – (Note: Some minor spoilers here…) I think I might have to put Twilight high on my top 5 worst movies ever list. Off the top of my head only The American comes close to it. My wife and I saw this movie this past Friday night. Much of the movie consisted of two characters (Edward and Bella) staring at each other making odd faces with little meaningful dialog. There wasn’t much of a conflict in the movie – the “bad” characters had been good in the previous movies and they seemingly had no motive to be “bad” in this one. The conflict was interrupted just to make sure that audience wasn’t subjected to any actual action and the movie ended. I realize it was only part one of two, but Harry Potter pulled it off and had two interesting movies. The next day, I introduced my wife to the Vampire Diaries and she said it was million times better. I wasn’t surprised, there is more action in any ten minute slice of the show than Twilight, and it’s not like I think that the Vampire Diaries is that great of a show.
  • Television Review: Once Upon a Time – I think that one of the better new shows this season is Once Upon a Time on ABC. I had thought it would be gimmicky with the fairy tale premise, but it works. It’s well worth catching up on Hulu. Give it a couple of episodes, I think you’ll thank me.
  • The Legend of Tebow – I think the buzz around Tim Tebow is one of the most enjoyable moments in the NFL season. The guy can’t throw a football ten yards without it bouncing a couple of times (I exaggerate slightly), but because he keeps winning everyone loves him. No one is giving the Bronco’s running game and their defense credit for the wins. I’m caught up in the ridiculousness of it and find it entertaining. So I’ll feed into that an spread rumors that Tebow can turn Gatorade into wine.
  • New England Patriots Defense – I think that it’s interesting how they can be the worst of defenses and the best of defenses. Okay, perhaps they aren’t the best of defenses, but they are 11th of 32 in giving up points which is pretty good. They’d be top 10 if not for giving up a garbage time score yesterday. At the same time they are 32nd in a 32 team league at giving up yards. I think a whole region of the country has enough radio talk fodder to keep it busy for the rest season.
  • One Edelman to Rule them All – I think that, despite the off-field actions, I’d take one “unknown” Julian Edelman over a dozen Tim Tebows. Edelman was drafted out of college as a QB and that is one of the few positions he hasn’t played in the NFL. It’s not often in today’s game that a player plays offense, defense, and special teams as he does. So many athletes won’t play this or play that and I commend him for showing that he’s not only willing, but able to do anything to get on the football field.

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Gift Card Giveaway from GiftCards.com

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A couple of weeks ago, I gave away a Mohu Leaf antenna for receiving over the air signals. Today’s my birthday, and I must be a crazy because I’m the one giving out the gifts. Instead of an antenna that you may or may not use, I’m giving away something that’s almost as good as cash – Visa or MasterCard gift cards. And I’m not giving away one of them, but three! I shouldn’t take complete credit for the giveaway – this offer comes from GiftCards.com.

Buy Discount Gift Cards

For the average consumer, the biggest reason to go GiftCards.com is to pick up discount gift cards. As I look now, there are gift cards to save 10% from Applebee’s and Barnes and Noble – even 15% from Ann Taylor. There are nearly 100 merchants available at this moment, but availability of specific merchants change often. Many people would sign up for a credit card that would give them 3% cash back on things that they’d ordinary buy. It only makes sense to take a minute and look to see if you can save 10%.

Design Your Own Gift Cards

Part of the great value that a gift card represents is that they are a little like cash. You give the recipient more flexibility to buy something that they want, while still giving something a little more personalized than a couple of Andrew Jacksons. Perhaps a better compromise would be to give GiftCards.com’s personalized gift cards. These are Visa and MasterCards with your own photos and messages. You can use a pre-designed template or create your own. This gives you a more personalized, yet more flexible gift.

How to Win the Gift Cards

Today is all about giving. So I think the giveaway should be based on giving as well. (That sentence may only make sense in my head.) In the wake of natural disasters such as Katrina, Haiti, New Zealand, and the most recent Japan earthquake, I’m realizing more and more how much others need. To help with that, I’m refocusing my efforts on Setting up an Emergency Charity Fund. Let me know in the comments what you are doing to give back. The better I judge your comment, the more virtual ping pong balls you receive for the drawing. I’ll stop taking entries on Saturday April 2nd at 11:59PM and announce the winners soon after. As always please include a real address so that I can tell you that you’ve won and get your address for the gift card. (Your email address is safe, I hate spam as much as you do.)

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