costco

How to save money with gift cards

by

Back in December 2023, I wrote about why you shouldn’t give gift cards as presents in the run-up to Christmas. I still stand by that, but wanted to expand on the last section of that post about when it is appropriate to buy gift cards. Because, it turns out, buying gift cards can actually save you money.

This is all about exploiting the difference between the actual cost of gift cards, and their value. Go to any supermarket, and there’s usually a display at the end of an aisle full of gift cards for various other shops, restaurants, cinema chains, subscription services and the like. When you buy one of those cards, a small percentage of what you pay goes to the shop (otherwise they’d be selling them at cost price). To give an example, when you buy a £10 gift card, 50p of that £10 may be kept by the shop, and the gift card supplier gets £9.50.

What we can therefore do is find places that, instead of pocketing that 50p, they pass some of that on to you as a saving. It’s a bit like cashback sites like Quidco (referral link), where they share some of the money they get as commission with you. I’ve listed a few options below:

Pluxee and other employer schemes

I work for an employer who is signed up to Pluxee. This means that I can buy online gift cards, usually at a 3-5% discount, for many stores. The ‘big four’ supermarkets are included, as are the likes of M&S, Boots, and many online retailers. It also handily keeps track of how much money I’ve saved – we’ve had it for close to ten years now and collectively I’ve saved over £100.

You can use it for big ticket items – back in 2020, I bought our LG TV mostly using Curry’s vouchers. At the time, the discount was 8% (I think) and at present it’s 6%. Ultimately it knocked around £25 off the cost of the TV.

The big advantage of Pluxee is that you can buy the gift cards and be able to use them almost straight-away. So, say you’re in a supermarket, and you’ve used one of those handheld scan and ship gizmos, so that you know exactly how much your shopping will cost. You can then quickly buy a gift card for that amount, go to the checkout, and use it to pay for your shopping.

Costco

Another place to buy gift cards at a discount is Costco (something I didn’t mention in my overview last year). As with most things from Costco, you have to buy in bulk. For example, you can buy five £20 Pizza Express gift cards, collectively worth £100, for £85 – that’s a 15% discount, and better than the 7% I get with Pluxee. You can buy the cards both in-store and online, and the online prices include postage.

Bear in mind that these are physical gift cards, and so you will need to actually buy them from the shop, or wait for them to come in the post. You can’t just buy one whilst waiting for your bill in a restaurant, for example. And you’ll need to be a Costco member to take advantage.

Sprive

I did a more detailed overview of Sprive last April. Sprive is an app for managing mortgage over-payments, but it includes a feature called Sprive Rewards for buying gift cards. It works in a similar way to Pluxee, except that the discount goes towards over-paying your mortgage. So, for example, if you buy a £10 M&S voucher through Sprive, it’ll still cost you £10, but Sprive will add another 40p onto your next mortgage over-payment for you.

The discount rates on Sprive tend to be lower than other apps – most supermarkets are only 2.5% for example. But it’s also the only place I’ve seen that offers Amazon gift cards, albeit at only 1%. However, one could argue that, because the savings are taken off your mortgage, you’ll save more in the long run due to lower interest payments.

If you do decide to sign up to Sprive, use my referral code HTWH65PM for an additional £5 off your mortgage. Incidentally, in the year since I originally wrote about Sprive, we now own 63% of our home, up from 55%.

Obviously, Sprive is only of use if you have a mortgage, Pluxee is only available to people who work for certain employers, and Costco also requires a membership. So, for everyone else, there’s Snip:

Snip

If none of the above options are available for you, then you may wish to consider Snip. I haven’t used it myself, but it allows you to buy gift cards in a similar way to Pluxee. The catch is that there is a monthly (£3) or annual (£30) membership fee. Now, if you use Snip regularly, you will easily save more than the monthly membership fee – assuming that a typical supermarket gift card has a discount rate of 4%, then one £75 shop per month would be enough to cover the fee.

Whilst savings of 3-5% may not seem like much, they do add up over time. This is why I like the tracker on Pluxee – saving a few pence here and there may not seem like much, but over the course of a year, it’s enough to pay for a trip to a cinema and a restaurant (which you could probably also pay for with gift cards). I will admit that it’s also a bit of a faff – I remember spending ages at a self-checkout in Ikea trying to get a voucher for 5% off, and struggling to get the payment to go through. It would be nice if things were just cheaper, rather than having to use workarounds like these.

Patronage! At the Costco

by
A screenshot of the Costco web site showing their store finder. There's a map with pins showing the location of their warehouses across northern England

Something that has been on my to-do list for a while was to join Costco, the American ‘big box’ members-only wholesale retailer where you can buy items cheaply in bulk. Although primarily aimed at trade buyers, individuals belonging to some professions can also join their membership scheme. And, last week, I finally got around to joining after they visited my workplace.

Costco isn’t particularly new to UK, with the first of their warehouses opening here in the mid-1990s. Our local warehouses are in Leeds (near Crown Point), and just off the M60 near Oldham. We went to the Leeds one.

Inside a Costco warehouse

Costco calls its stores ‘warehouses’ and it’s an apt description. It’s a bit like the warehouse bit at the end of Ikea, where what you need is on pallets, and the shelving goes way up beyond customers’ reach to store excess stock. It had a similar feel to the hypermarkets that you get in France such as Auchan and Grand Casino, albeit with much higher shelving.

As well as shelves full of products, services offered in store include a butcher’s, an optician’s, a takeaway food stall, and tire fitting for your car. There’s also usually a fuel station, offering discounted fuel – again, for members only.

Almost everything is available in much larger quantities than you would expect at a standard supermarket. Either because they’re sold as multipacks, or just in bigger packaging. All prices are displayed without VAT added; where VAT applies, the VAT inclusive price is written in smaller lettering. After all, Costco is primarily a wholesaler selling to businesses.

Range

What you probably won’t find is a huge range of products. Costco generally sells one brand for each item, and, as it’s aimed at traders, this tends to be branded items. This means that, even with a bulk discount, items may not always be cheaper than supermarket own brands. That being said, Costco does offer its Kirkwood brand for some items like packaged meat and toilet rolls.

Being an American supermarket, some of the meat on sale is imported from the USA. American meat isn’t commonly sold in UK supermarkets and it’s the first time I’ve knowingly seen it on sale here. Generally, wherever American meat is on offer, there will be British meat alongside. American meat is cheaper, but also tends to come in much larger quantities. I have to say that I thought that the British meat looked to be better quality. I also have my issues with how animals are reared on American farms, as their welfare standards aren’t comparable with Britain and Europe.

Some of the things we bought on our first visit included 40 rolls of toilet paper (actually 10 packs of 4 rolls), huge bottles of Heinz ketchup and 24 can pallets of Cherry Pepsi Max and Orangina.

Costco Membership

You have to be a member to shop at Costco, either online or in store. Anyone can register and pay for an online account, but if you’re an individual, there are eligibility criteria that you need to meet to be able to shop in store. Current prices are here; including VAT, a standard individual membership is around £34 per year and an Executive membership is around £75. Executive members get an additional 2% off their Costco spending, so if you go regularly, it could work out cheaper. I reckon you would need to spend an average of around £170 per month at Costco for it to be worthwhile.

It’s worth noting that the membership cards are not supposed to be transferable, so the named person needs to be there to enter the store. As standard, you get a card for yourself, and a second card for a spouse (so both Christine and I have one each). You can then add one additional person to your account; this costs extra but would be less than a separate individual membership. Besides cardholders, members can bring a maximum of two guests with them on a shopping trip. I suspect that we’ll be offering to bring friends with us in future, so that we can buy in bulk and then split up our purchases later. If you’re a real-life friend of mine and you’re reading this, yes, that means you – contact me and we’ll try to arrange something.

In terms of eligibility, I qualify as I work in the education industry, and Christine works in healthcare so she qualifies too.

Prices

The prices are pretty good. For example, the aforementioned 24 can pallet of Cherry Pepsi Max was £8.38 including VAT (£6.99 without). Tesco sells an equivalent quantity for £10.50 and although I have seen offers as low as £8 from time to time, it’s a good price. They also don’t have ‘multipack can, not to be sold separately’ written across the top.

Vanish stain remover cost us £11.38 (£9.49 excluding VAT) for 1.9 kg; Tesco want £11.25 for a smaller 1.35 kg box. And we got two 880g bottles of Heinz Tomato Ketchup for £6.99 (VAT exempt), instead of £4.50 from Tesco.

But, like I said, most products are branded. We didn’t buy any herbs or spices because we could get them much cheaper at one of our local Asian supermarkets, and I can get own-brand cereal much cheaper at Lidl. Also, there were some things that we didn’t buy because of the quantities. For example, you can’t just buy one tin of kidney beans, you have to buy at least 24. Which is great if you’re regularly cooking chilli con carne, but otherwise is a lot of food to have to store. We’re lucky that we have a cellar and can put bulky items there until needed, but if you don’t have lots of storage, this could be a problem.

So, should you consider a Costco membership? If you can shop often enough to make the membership cost worth it, sure. Individual membership works out at around £3 per month and we saved more than that in one visit, although you also need to factor in travel costs.