Still Worth Buying Gift Cards at Office Depot? The Economics of No More $500 Cards

There’s been much electronic ink spilled since the weekend about Office Depot’s decision to pull variable amount gift cards from their shelves. There’s been a great deal of speculation about their motives, the best intelligence being that these are a focus of fraud (people buying gift cards with stolen credit cards, and they’re popular with drug dealers to boot).

Lower dollar gift cards have the same price to purchase, and cost less to process (lower credit card interchange fees for each card) so there’s better offsetting economics for the loss prevention folks to look at.

Of course it could be some other motive, and we’re all just stabbing at the dark. I haven’t had high level discussions with Office Depot about this, so my speculations are just that.

But what I’m more interested in what the change means for mileage-earning. There may well be replacements coming for those higher dollar gift cards, but what if there aren’t?

What the Value Proposition Used to Be

If you could earn 5 points per dollar with certain credit cards shopping at an office supply store, you could then buy gift cards and use those for your every day spend and effectively earn 5 miles per dollar on everything. The cards would cost $4.95 so you would pay 1 cent per point to earn those extra 4 points.

It used to be that you could buy ‘Vanilla Reload’ cards even cheaper, and cash those out, but Office Depot stopped selling those.

So some folks were buying gift cards, and using those gift cards to buy Vanilla Reload cards at CVS. Then loading those cards onto Bluebird, and paying off the credit card. Purchasing both cards, your cost was $8.90 per $500 or 2500 miles earned. Well worth it at just over 1/3rd of a cent per point.

Are $200 Gift Cards Worthwhile for Every Day Spend?

If you can buy a $200 fixed-value gift card at Office Depot for $204.95, and earn 1000 miles in the process, then spend the gift card instead of a credit card for everyday transactions you are earning an extra 4 points per dollar at a cost of $4.95.

Those extra 800 points cost you a bit more than 3/5ths of a cent apiece. That seems worth it to me but there’s the hassle factor.

  • They are harder to use for larger transactions. You can use multiple $200 cards, but not every merchant will do a split tender transaction (let you pay with more than one card) and it’s extra time and aggravation to do so.
  • You have more cards to keep track of, each with small balances at the end, I personally load small balances in any exact amount of $10 or more onto my Starbucks card to not wind up with extra cash on cards.

It’s probably still worth buying $200 cards at $4.95 for the extra points, but it’ less valuable than it used to be when you could buy $500 cards at the same cost.

And so I’ve struggled with the math and the ‘hassle factor’ of the $200 fixed-value card which also cost $4.95. It’s a pain to use gift cards with no name on them, track balances, and liquidate funds at the end (say, putting any precise amount over $10 onto a Starbucks card in-store).

With the same cash cost for a lower card value I’ve struggled with whether or not it’s worth it. But I believe it is. $200 cards cost $6.95 at Staples which makes the value proposition even less good, though.

Are $200 Gift Cards Worthwhile for Purchasing Vanilla Reloads?

For folks with access to Vanilla Reload cards, the economics have changed as well but it’s certainly still worthwhile.

You can still load $1000 a day in Vanilla Reloads onto a Bluebird card. So:

  • (5) $200 Visa gift cards @ $4.95 each = $24.75, earns 5000 Ultimate Rewards points
  • (2) $500 Vanilla Reload cards from CVS @ $3.95 each is $7.90

You’re going to have to use the 5 different gift cards to make a $1000 payment. You aren’t just liquidating one gift card to one ($496.50) Vanilla Reload. But I haven’t had a problem doing this.

Your cost is $32.65 to generate 5000 points, or a tad until 7/10ths of a penny per point — the same price as my all-time best haul, the 2009 US Airways holiday shopping promo (“Track it Back stickers” which of course could be done strictly at your computer and without limit, but for one airline’s currency rather than a flexible currency).

I’d argue this is still worthwhile, just less lucrative than it used to be.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Too much of a pain. Worth it for the free merchant gift cards like you wrote up yesterday (Starbucks, Amazon, iTunes), but otherwise i just use my 2x and 3x credit cards for my everyday life purchases. It also seems every quarter i get an offer from BofA or Citi for 3x as well up to $1,250 or so in purchases for things like groceries, gas, drugstores.

  2. I did not see any $200 cards with $4.95 fee when I stopped in yesterday. All were $6.95 (ouch!). Which ones in particular are you seeing with $4.95 fee?

  3. @Gary: I appreciate you doing the math considering it’s an EXTRA 4 points.

    I’m tired of reading bloggers merely dividing fees by UR points and arriving to a conveniently lower number.

    I like to compare the ‘cost’ of buying miles vs. 1x (in this case 800 points) and sometimes vs. 2x (in this case 600 points).

    This allows us to give an objective value of the UR miles purchases when redeeming those gift cards.

    As an example the $206.95 gift cards at Staples earn you 1,035 so the cost vs. 1x is 6.95/835 = 83 cts per 100 and vs. 2x is 6.95/635 = 1.09 per 100.

    That means that $200 gift cards could even be emptied at restaurants, forfeit the 2x Sapphire, and still be considered bought at a relatively low value.

    That’s why I am not renewing my Sapphire partly.

    Again, keep up the good work. MileValue is the worst at these types of calculations, like using a $1k min spend to compute the price of miles ‘purchased’…

  4. 100% worth if it meeting a minimum spend. Also OD has tons of Lowe’s cards, so a new $1000 fridge=8,000 UR points if OD then Chase portal. The whole thing should be a wet dream for contractors.

  5. I have started to buy mall gift cards in $500 amounts. The fee on them are only $2.95. They are sold at the mall service counter so you have to make a trip there but they can be used anywhere at accepts VISA or AMEX. You still have the problem of same amounts left over at the end but at least the service charge is low.

    No one has EVER balked at letting me buy with a credit card.

    More info here:

  6. It would be interesting to see if the cashier at CVS knows how to run 3 gift cards to process 1 VR transaction.
    The landscape keeps changing.

  7. If carrying around smaller denomination cards is what is deterring people, don’t forget about the american express for target that allows you to load up to $1000 using multiple cards for a $3 flat fee regardless of how many cards you use. So you can load five $200 cards onto the AMEX for Target for $3. Again…. yet another tack on fee but $3 may be worth it for the convenience standpoint.

  8. The $1000 per day Bluebird limit isn’t the issue – because if you’re aiming that high – you can only do it 5x per month before you’ve reached the monthly $5000 cap. *IF* that’s your goal, of course.

  9. I am still buying $200 gift cards at Staples and Office Depot with my Ink. I find Vista gift cards for $4.95 and for me, the extra 800 is worth $4.95. I also just started buying $500 gift cards at the grocery store with my Hilton Amex (6x). That’s better than earning 1x per dollar spent every where else.

  10. Agreed I agree it is mathematically worth it at $4.95 (though not sure where you see $4.95 per card, I saw $6.95 in Maryland). It’s too much of a hassle for anything other than meeting minimum spending ONLY on the Ink cards. Otherwise as of now you’re better off using other stores for the variables, AP, etc.

  11. Today I was at Walgreens and was browsing the Vanilla Visa gift cards, valued from $20 to $500 for $4.95 fee. I need to spend $10g (Amex Biz offer for 75,000 points) in 4 months, and was curious what you think about this ? Any info appreciated. I would hate to lose this promo…

    Thanks again !

  12. UR points are truly worth $0.01 at a minimum, $0.0125/p if redeemed for travel through UR travel portal.

    If I’m buying the cards with a $6.95 fee, I’m paying $0.008675/p for spend that would otherwise be in a 1x category, and $0.01158/point for spend that would otherwise be in a 2x category (gas on IB, travel/dining on SP).

    That’s not cheap, by any stretch. But I like UR because I like UA and Hyatt points. I’m saving up 240,000 points so I can get two J tickets to Asia. Right now, I’m at 210,000 points. So I *need* the extra 30k. Beyond that, it’s a value call. Using the more expensive price, I have to ask myself: Is a Hyatt Category 6 hotel worth $254.76? Is a UA/*A J ticket to Asia worth $1389?

    A further calculation might actually treat the cost as a form of interest. Granted, I’m not borrowing money, but I’m paying to get access to my points sooner. I need 30k UA miles to reach an award — for my normal spend patterns, it’ll take me three years at 1 point per dollar. But for $0.08 cpp, I can get access to those points within a year.

  13. Good post. Similar to how you can buy the Amazon cards from OD directly, I buy the $200 cards and then if I end up with a weird amount left (say, under $10) just liquidate the remaining balance on in the form of a gift card. It’s really not that big of a hassle; I just make sure I don’t have more than two Amex/Visa gift cards at any time so I avoid getting confused.

  14. The other problem with carrying multiple cards (even more in case of $200 cards) is during returning the merchandise. Merchant wants to credit the same card that was paid with, but I have already thrown that visa gift card away.

  15. I have a huge stack at home just in case they won’t refund to gift card (store). Never throw them away ha.

  16. @Curtis LOL
    I used to be paper junkie, Now I am plastic junkie.

    I used one of the GCs to pay for United flight fees and taxes. When I changed the itinery, they refunded $12 to the card I had paid from. I have no way to retrieve that $12 because I don’t have any old cards and I don’t know which card I had used. Oh What a problem!
    I begged them to refund to another card, but no avail. Sigh!

  17. whats all this jabber about liquidating small amounts off the GCs? walmart and walgreens at a minimum will suck off whatever is left (no need to keep track). Go buy a coke and you can pay with up to five cards….

  18. or you could buy gift cards, amazon at staples, and sell them on ebay. Not risk free, and I have not done it yet but the reward is high.

  19. The partys finally over IMHO
    6.95 fee for a 200 dollar gift card?
    1000 dollar in gift cards is now approx 35 dollars
    previously 8
    You can take Chase,Vanilla reloadables and Bluebird and tear it all up as far as I’m concerned
    As the big shot investors say I’m out
    The opportunity is a lot less appealing and they got what they wanted

  20. Wouldn’t it be easier to buy VR’s at a drugstore for $3.95? The cost for a $500 reload would be .0079 cts per mile which is pretty close to the TIB deal. One can use ink, sapphire or whatever to get this.

  21. I’ve found some retailers won’t let me buy gift cards (or Vanilla Reloads) with Prepaid Visa and Amex GC’s. Money laundering concerns. Something to keep in mind before you head out and buy $2,000 worth of cards.

  22. Is is wise to buy Visa $500 gift cards, with $3.95 activation fee, to meet bonus spending requirements on Amex Rewards CC ? Can I purchase these vanillavisa gift card with my CC ? I see plenty of them here in CVS …. thanks

  23. @DarnR if you don’t have other ways to meet the spend, and you can float the money, then sure… note that terms and conditions say these purchases may not count but i believe that they will

  24. I would hate to give up the 75000 bonus Amex Reward points on meeting my spend criteria. I will look into the “CC fine print” before I commit to these GC purchases…

    Thx Gary !

  25. @DanR, I’ve been buying Amex GCs for minimum spend through Amex’s website. It works well for at least Amex and Chase (definitely not Citi and not sure about others since some treat it as a cash advance). Go through TopCashback or BigCrumbs for cashback (variable but currently 1.5% and 1.4% respectively), sign up for free overnight shipping temporarily, and then pay a $3.95 fee per card where card values come in many denominations with $1k, $2k, and $3k at the top end. It’s not the best way to earn points for spend but it’s a heck of an easy way to meet spending requirements for cards from certain banks. Of course the downside is that it’s a lot harder to track spending on the “temporary” gift cards as well as concerns with refunds, extended warranties, etc. While it’s not the most efficient use I’ve just been churning the GCs through WilliamPaid for rent and eating the 2.95% fee and that also happens to take care of the tracking, warranty, etc. concerns. I care only about the signup bonuses vs. all of the incremental brick and mortar earnings.

    To get $5k spend on my Amex Biz Gold I bought $3k and $2k cards. I spent $7.90 and made back $70 on cashback and 5,000 MR points. Of course my rent payment off of them was costly. Cost all in was $85 for 55k MR points with almost zero hassle or risk.

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