Gift-card Resale Market Thrives Online
Kathy Kristof

HOME > WEALTH

If you have a bunch of unused -- or partially used -- gift cards sitting in a drawer somewhere, you're not alone. Some experts estimate that the average family has $300 in unspent plastic cash.

If the cards were issued by a single store or chain, they're only a minor problem. Under California law, these retail gift cards cannot expire or lose value over time. It's essentially like having uncashed checks in your sock drawer.

So-called bank gift cards, which can be used at numerous businesses, can be more trouble. These cards, which usually carry the imprint of a credit card company -- such as Visa, MasterCard or American Express -- can expire, are subject to fees and can lose value over time. The situation has gotten somewhat better because under recent U.S. regulations, bank gift cards issued after Aug. 22, 2010, cannot expire within five years and their fees are restricted.

But what do you do if you need the cash much more than products? You probably won't get much help from the law -- in California, issuers of retail cards are required to redeem for cash only when a card has less than $10 on it.

But there's now a vibrant gift card resale market online.

"Most people don't know that they can trade their gift cards in for cash," said Anson Tsai, founder of Cardpool. "They're really surprised to know that they can sell it -- or buy another one at a discount."

In fact, there are almost a dozen gift card exchange websites. Understand, however, that you won't get $50 for a $50 card. These sites generally offer considerably less than a card's face value. That said, if you want to sell, here's how:

Determine the value

If you have old cards sitting around, you might not know what they're worth. That's because they could be partly used or partly used up from fees. A look at the gift cards in our gift-card cubbyhole unearthed nine cards -- five of which had been partially used and one that had expired. (Stupid, I know.)

To determine the value, flip the card over and look for a toll-free phone number you can call to make an inquiry. Some cards will also list a website where you can input the card's number and security code to find out the current balance.

Keep or sell?

If the card has a balance of less than $25, you probably won't be able to sell it on any of the gift-card swapping sites. According to the folks at Plastic Jungle, one of the more established sites, they simply can't make money on cards that are worth that little.

Also note: You can't sell all cards at all sites. Neither the Plastic Jungle nor Cardpool sites would provide a quote for Blockbuster or Cal State bookstore gift cards. But I found that GiftCards.com would pay $15 for a $25 campus bookstore card, and GiftCardBin would pay $16.25 for the $25 Blockbuster card.

Shop around

If you have a card that many resellers take, it behooves you to do some comparison shopping.

A $50 Old Navy card, for example, brought bids ranging from $35 (CardBin) to $42 (GiftCards.com). Plastic Jungle offered $43.05, but that was if the payment was in the form of an Amazon gift card.

Take heed that one site that is advertising heavily now, CardWoo, is owned by the same people who launched the much-complained-about Cash4Gold operation. The operators of CardWoo don't guarantee a particular payment but say they will send you what a card is worth after they get it. Much like Cash4Gold.

Document and deliver

Before you send in a card to a company, it's a good idea to check its reputation with the Better Business Bureau and online. And keep some documentation of the transaction in case the website fails to send your check or sends less than what was promised.

"Ideally, you should just use your gift cards," Cardpool's Tsai said. "But if you can't, you should really check out the sites. People are often surprised by what they find."

Available at Amazon.com:

Lifecycle Investing: A New, Safe, and Audacious Way to Improve the Performance of Your Retirement Portfolio

Worry-Free Investing: A Safe Approach to Achieving Your Lifetime Financial Goals

Spend 'Til the End: The Revolutionary Guide to Raising Your Living Standard--Today and When You Retire

The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work, and Living

Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back