How to Get the Most Out of Your Gift Cards

Gift cards may be the perfect gift: free money, in a sense, that is equivalent to a personal spending card. Few restrictions apply, so you can pretty much use gift cards when and how you want.

Knowing whether the card is open-loop or closed-loop, though, will ensure you get the most out of your card. An open-loop gift card can be used at any store that accepts major credit cards issued by Visa, MasterCard, Discover, and American Express. A closed-loop gift card can be used only at specific stores or their partners.

Ease and flexibility aside, there are ways to get even more out of the gift card.

Sell It.

If you receive a gift card that you don't expect to use (or if you really need the cash), sell it. Several websites buy these cards, such as GiftCard Zen, Gift Card Rescue, and ABC Gift Cards. These websites are reliable, safe, and offer a pretty good buy-back price -- usually several dollars less than the value or a certain percentage of the value. (You can also sell partially used gift cards; that is, cards with a remaining balance.) Before selling your gift card, shop around to see which site offers the highest price. Many gift cards are given as presents during the holiday season, so there's a good chance you could make a fair amount of money by selling them.

Save It for a Rainy Day (or Something Special).

Avoid the temptation to use the gift card just because you have it. This sounds like a no brainer, but saving a gas or grocery store gift card can come in handy when a financial crisis hits. One excellent benefit of gift cards is that most don't expire, although some must be used within a few years. (If the card does have an expiration date, the value doesn't fall to zero but you'll have to purchase another card to access the funds.) A good way to avoid spending the funds prematurely is to stash it away in a safe place (not in your purse or wallet) and retrieve it when necessity strikes or when you find that one thing you've always been wanting.

Pay Your Bills.

If you have an open-loop gift card, use it to pay bills, such as a cell phone or electric bill. A gift card can really have an impact on your budget when the funds are put towards necessities. The cash you would have used otherwise can be deposited in your savings account or spent paying down other debts.

Don't Forget Discounts.

Gift cards often can be leveraged by combining them with coupons and other promotions. Visit the retailer's website or browse the ads to learn about deals. Taking advantage of discounts is a sure way to stretch the value of a gift card.

Find Out About Fees and Other Conditions.

Some cards charge a fee for each purchase, a few have a near-term expiration date, and some must be activated within a certain period of time. It's also a good idea to check whether the gift card can be used where you'd like to spend it; some businesses, such as hotels, don't accept prepaid gift cards as a valid form of payment. As soon as you receive a gift card, thoroughly go over the fine details in the cardholder agreement. It would be most unfortunate to put away a card for that special treat only to realize the "use by" date has passed or the merchant won't take it.