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How to save money with gift cards

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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.

Why you shouldn’t buy gift cards as presents

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An AI generated image of a Christmas tree with lots of presents and gift cards underneath it by a window.

When you need to buy a present for someone, and aren’t sure what to get them, gift cards seem like a good idea. With Christmas coming up, I’m going to explain why they’re not always the best idea.

They’re less flexible than cash

If you spend £10 to buy a £10 gift card, all you have done is taken £10 of cash, which can be spent anywhere, and converted it into a sort of pseudo-currency that can only be used at one shop. You can’t use a gift voucher for John Lewis at M&S for example.

Whilst multi-retailer gift cards like Love2Shop and One4All exist, they still limit you to a small range of retailers. And you can usually only spend them at large chain stores, so your recipient won’t be able to spend them at a local, independent shops. Let’s face it, Amazon is likely to be around for a long time, but independent shops would probably appreciate your custom.

They can only be used to purchase things

This might seem obvious, but you can only use gift cards to buy more things. You can’t use gift cards to pay bills, or repay debt, for example. And I mean, you really can’t – if someone claims to be HM Revenue & Customs and asks you to pay your tax bill with iTunes Gift Cards, then it’s a scam.

For someone who may be drowning in credit card debt, receiving some money that they can use to pay that off may be more meaningful. At worst, you could end up spending your money on a gift card that can only be used to buy something at a shop where the cost of getting there is higher than the value of the card.

They could also be worthless. If you’re an Android phone user, then you’re not going to get much out of an iTunes gift card, for example. You could try a web site that exchanges gift cards, where you can sell an unwanted gift card for cash. However, you’ll probably get less than its value back, and obscure gift cards may not sell for much.

They expire

Most gift cards expire after 12 months. We’ve had this problem before; a relative bought our (now) seven-year-old a gift card for a well-known toy shop chain. As their birthday is close to Christmas, we saved it to buy a gift the following year, but by the time we came to use it, it had expired. Meanwhile, cash never expires.

If the retailer goes bust, they may become worthless

We’ve recently seen the demise of Wilko in the UK, and other large chain stores like Debenhams, Jessops, Comet, Woolworths, Burtons have all disappeared in recent years. Usually, when these companies go bankrupt and call in administrators, their gift cards immediately become worthless. At best, you can sign up as a creditor of the company in the hope that you may get a fraction of the value of the gift card back.

Some people have lost serious money because of this in the past. Debenhams used to offer a wedding list service, and so those that had people buy them Debenhams gift cards as wedding presents may have lost out on hundreds of pounds.

What to do instead

Buying presents can be tricky, and I don’t think anyone wants to buy something that’ll just end up listed on eBay on Boxing Day. But maybe have a conversation with the person who you are buying a gift for first. Surprises can be nice, but so can knowing that you’re getting a thing that you actually want for Christmas. Christmas lists for Santa needn’t just be for children; you could keep a list in a note-taking app, for example, so that if anyone asks you what you want, you can tell them straight-away.

Or you could just give people cash. If all you are doing is swapping the same amount of money for a card which is restricted to one retailer and expires, then you’re taking choice away from your recipient. With cash, your recipient could use that money for:

  • the weekly food shop
  • to pay off a credit card
  • buy something nice from a small independent shop.

An Amazon gift card won’t allow the recipient to do any of those things.

If you don’t want to put bank notes or coins in the post, you can send a cheque. Despite rumblings from the banking industry a few years ago, most banks will still let you send and receive cheques. Indeed, most banking apps will let you scan cheques, so you can scan them on Christmas Day without waiting for a branch to open. Alternatively, you could send an IOU in a card, and then do a BACS transfer on Christmas Day. That’s if you already know their bank details, of course.

When is it appropriate to send gift cards?

So, now that I have written this, you may be surprised to hear that I am planning to send gift cards to some relatives this Christmas. But this is only because said relatives have specifically asked for them. And that’s fine – you could ask for gift cards as a contribution to a big purchase, for example. Just be careful that you choose a retailer that isn’t at imminent risk of bankruptcy. Money Saving Expert News is usually a good place to get news about retailers that are, or are at risk of entering administration, and their policy on accepting gift cards.

You can also sometimes buy gift cards at a discount. My employer offers Pluxee as an employee benefit, which sells gift cards at a typical 4% discount – but sometimes more. M&S is 6.5%, which means that you can buy a £25 gift card for £23.38.

If your employer doesn’t offer something similar, but you have a mortgage, then Sprive is worth considering. With Sprive, the discounts are smaller (about 3%) but the money you save is taken off your mortgage. If you decide to sign up to Sprive, use my referral code ‘HTWH65PM’ to get an additional £5 off your mortgage.

If you’re buying Amazon gift cards, it’s worth checking your personalised promotions page (sponsored link). Sometimes, Amazon offers additional discounts available if you buy gift cards in bulk.

Christmas Day is three weeks today. If you haven’t already finished your Christmas shopping, maybe reach out to your gift recipients to find out what they want. Just be aware of the last posting days for gifts.