What you need to know about buying a gift card with another gift card.
3 Things to Know about Buying a Gift Card with a Gift Card
I have used a gift card to purchase another gift card a number of times, but in the last couple of years, I have noticed that stores are increasingly setting store policies making it so you can no longer buy a new gift card with a gift card you already have. So that left me asking three questions. The first is, who decides if you can buy a gift card with a gift card? Secondly, why would you want to? And thirdly, Why would you not be allowed to? This is what I came up with.
Who Makes the Gift Card Rules?
In 2009, Congress passed a federal law called the Credit CARD Act of 2009. With it’s passage, merchants could no longer put expiration dates on gift cards shorter than five years nor could they charge gift card fees for non-use in less than a year. I looked through this Act and could not find anything regarding the legality of buying a gift card with a gift card. So next I turned to State gift card laws and again could not find any reference to this type of transaction.
Since there is no federal or state law dictating whether or not you can buy a gift card with a gift card, companies get to decide if they will allow consumers to use gift cards in their stores to buy other gift cards–that includes buying the same brand card or a third-party card. Keep in mind, however, that Visa gift cards are different. While you may not be able to use a store’s gift card to buy another gift card, you can probably still use a Visa gift card to buy a branded gift card. I’ll explain more below.
Why Would You Buy a Gift Card with a Store Gift Card?
When asked this question, I have heard others say, “Why would you even want to purchase a gift card with a gift card?” Oh my dear, there are several legitimate reasons. Let me explain a few of them below:
1. To get the Gift Card you Want. Thanks to the proliferation of gift card kiosks at malls, grocery stores, craft stores, gas stations and more, there are a variety of places that you can walk into one store in order to buy a gift card for another. This creates an opportunity to swap a gift card you received for one that you’d rather have. For example, my kids received a Toys R Us gift card just after Christmas. Since Santa had been good to them, I suggested they did not need more toys. Feeling satisfied (for the moment), they agreed. So we took the gift card to Toys R Us and used it to buy a movie gift card, ice cream gift card and an iTunes gift card instead. (All great ways to have fun on winter break!) This is about the only way I know to effectively “trade” a gift card without giving up some of the face value.
2. To Split the Gift Card Value. Gift cards are easy to regift, but sometimes the amount on the card is an odd value (e.g. $23.42) or is more than you want to give someone. If you take the gift card to the issuing store, you may be able to use it to buy a new gift card (or cards) in the dollar amount you want.
3. To Update the Plastic. I had a discount Williams-Sonoma gift card that looked like it had been in my wallet for a while. I wanted to give it to a friend as a wedding gift, but knew that I could not give her the one I had. So, I took it to the store and used the old gift card to buy a small gift plus a new Williams-Sonoma gift card that looked brand new. With the awesome customer service at Williams-Sonoma, the clerk put the new gift card into a delightful gift card holder complete with tissue and a bag.
Those are just a few legitimate reasons to use a branded gift card to buy another one. (More on less legitimate reasons below…)
Why Would You Buy a Gift Card with a Visa Gift Card?
Visa gift cards are different than store gift cards in a variety of ways. The revenue model is different, redemption is different, how stores make money from these gift cards is different and the rules and regulations around open loop gift cards are also different. In all my searched, I have found no federal law, state law or store policy prohibiting the ability to buy a store brand gift card with a Visa Gift Card or any other type of open loop card.
Here are a few reasons why you might want the freedom to do this:
1. To Use the Gift Card Balance. If you have a bank-issued gift card such as a Visa or Mastercard®, you may eventually find yourself holding onto a gift card that has a miniscule balance left on it. You don’t want to throw the gift card away, but you may be finding it inconvenient to spend that last $3.58 as well. An easy thing to do is buy an Amazon egift card for that same amount. Then you can apply the Amazon egift card directly to your Amazon account. The next time you shop Amazon, you’ll get that $3.58 applied to your purchase.
2. To Extend the Life of a Gift Card. Suppose you receive a gift card from your cable company as a thank you for being a valued customer. The gift card you receive in that situation may have an expiration date on it (since it is a promotional prepaid card versus an actual gift card). To avoid having the gift card funds expire, use it to buy a non-expiring gift card from a store or restaurant in your area.
3. To Make a Donation. I had several Visa gift cards that we had ordered for a media event but did not use. When a charity asked if we could make a gift card donation, I wanted to simply donate the unused Visa gift cards. However, since I had purchased the cards several months earlier (almost a year), I knew that inactivity charges would soon start to deplete the value of the gift cards. Rather than donate gift cards that would have to be used quickly, I used the Visa gift cards to buy store brand gift cards that had no expiration date.
What is the Basis for the Store Policy?
Lastly, I think it is important to address the basis for a store policy prohibiting this type of transaction. The primary reason that stores will not let you buy a gift card with a gift card is to cut down on money-laundering with gift cards. A typical scenario involves a thief using a stolen credit card to buy a gift card then using that gift card to buy another one–creating some space between the ultimate use of the money and how it was originally and unlawfully obtained. Like so many things in our society, it is disappointing when illegal practices instigate rules and regulations that make it hard for honest people to do things that otherwise would cause no harn. I have purchased gift cards using other gift card multiple times, all for good, legitimate reasons.
As Gift Card Girlfriend and your resource for all things gift cards, I would love to give you a definitive answer. But until a law is made that either universally allows or prohibits buying a gift card with a gift card, you will just have to try it, check store policies and ask cashiers if the transaction is allowed. There are other ways to rid yourself of the gift cards you do not want or will not use. Try this blog post on ways to use unwanted gift cards.
Do you have any other questions? If so, let me know in the comments below or send me your gift card questions on Twitter (@GCGirlfriend).
Happy Gift Carding!
~Shelley Hunter, Gift Card Girlfriend