Maximizing Grocery Store Bonuses with Gift Cards

I wrote previously about the best credit card options for grocery store bonuses and how we can earn 5-6% cash back on all our spending at supermarkets. Purchases at grocery stores do make up a significant portion of spending for the typical family. However, we should still keep in mind that grocery store spending doesn’t have to be limited to just buying groceries. Some grocery store chains also sell PIN based Visa gift cards, which are essentially equivalent to debit cards. You can then use these cards for other everyday spending or turn them into cash or load them onto your Bluebird.

Buying gift cards at grocery stores is not something I personally do frequently (I don’t find myself in a grocery store very often given I order my groceries through Fresh Direct), but it’s a nice option to add the occasional value. As an example, let’s take my Blue Cash Preferred Card from American Express credit card. It offers 6% cash back on grocery store purchases up to $6000 a year and a $75 annual fee. If I do nothing else with this card, but buy a $500 gift card once a month at a grocery store, here are the numbers:

• The fee on the $500 gift card will be $4.95 or about 1%.
• At 6% cash back, that’s 5% or $25 “free money” left over.
• After a year, I will earn $300 and pay an annual fee of $75. That brings my total profit to $225 for the year.

$225 may not be a wealth-changing amount, but let’s put in perspective how much work it takes. If I can find a convenient way to liquidate the gift card (most likely just putting other everyday spending on it or getting cash back), then it’s almost no extra trouble. All I am doing is picking up a gift card every other month. The point is that, for me, it’s a profitable way to earn a few extra hundred dollars with very little extra work.

The PIN based Visa gift cards

I’ve had success at some grocery stores finding Visa Vanilla prepaid gift cards in $500 denominations. While there may be others, the one in the “present package” tends to work well; these come in different colors and present pictures. The fee on each card is $4.95 and you can load each card with $20-$500. Considering the fee is flat regardless of how much you load, it always makes sense to load $500. You can then use the gift card the same way you would any debit card inputting the last 4 digits as the PIN.

As a warning, I always make sure to keep all my receipts from buying the gift card until I know everything works and it was activated correctly. I haven’t had any issues recently, but things can always go wrong with technology. It never hurts to have all your documents in one place!

What to do with the gift cards

Now that we know which gift cards to buy, here’s a few ways for how we can use them for everyday spending or turn them into cash.

1.         Use for everyday spend. The gift card functions as a debit card and the easiest (though slowest) way to unload it is to just use it for your regular purchases. I have different credit cards that earn bonuses for spending in various categories, but not every category earns a bonus. Buying a gift card at a grocery store and then proceeding to use it for other spending gives me a way to earn 5% cash back on my non-bonus spending. Keep in mind that this option will lower your profit a little bit from $225 since you could be using another point-earning or cash back card on these everyday purchases. Still, 5% is higher than what most cash back cards earn on base spending.

2.         Load onto your Bluebird card. At Walmart, you can load your Bluebird card with any debit card by going to the register and asking the cashier. The load limit is $1000/day or $5000 a month. Bluebird, which is issued by American Express, is a card that is meant to be a replacement for a checking account. The funds on the card can be used to pay bills or send checks. For more information on Bluebird, you can read: The Bluebird and Vanilla Reload Cards: Earn Miles Paying Bills.

3.         Buy money orders. Walmart sells money orders for 70 cents each and I have had success buying these with prepaid debit cards. If you want to use a $500 debit card for a money order, then you want to buy one for $499.30 (plus 70 cent fee). Just be aware that the prepaid debit card does not have your name on it so, occasionally, a store employee may not be willing to take it. In that case, don’t make a scene and just have a contingency plan. You may be able to find money orders sold at other locations so do keep an eye out.

4.         Get cash back at other stores. Some grocery stores, pharmacies or other places have registers coded that will sometimes give you the option to get cash back when you swipe your debit card and enter a PIN. This requires some investigating to see which registers give you the option, but certainly something to keep in mind.