How to buy and sell gift cards legitimately

Gift cards are popular for a reason, and you can buy them practically anywhere: retailers, grocery stores, restaurants and sites like Amazon. That makes them a very convenient gift to give and receive at the holidays.

But their wide availability also comes with some dangers, with gift card scams becoming more common. While acquiring gift cards at valid locations and sites is safe (since cards are activated upon checkout), you should always avoid websites that advertise as a "gift code generator" or anything like it. That's a false claim and a phishing tactic. 

And then there are third-party gift card websites offering to buy from and sell to consumers, which is where it gets tricky. Gift card middlemen allow you to buy and sell gift cards online or send them to others. The cards can even be partially used, and you do it all from the convenience of your couch. But it's important to be careful which service you choose, as there are no overarching consumer protections for gift card transactions. Unlike unauthorized charges on your credit card, any money you lose on a gift card is likely gone for good. 

Here's information that will help you protect yourself and steer clear of nefarious activities while purchasing or selling gift cards online. Before you finish holiday shopping or try to return unwanted gift cards in your wallet, read on for ways to keep your money and identity safe. 

Read more: Are you being scammed? Here's how to know and what to do

A checkered history of gift card companies

First, some history. A lot of gift card sales and arbitration companies have struggled financially and shut down over the last few years. In some cases, like that of The Plastic Merchant, many customers were left with uncompleted transactions and lost their money permanently when the company officially declared bankruptcy in 2019. Much mystery surrounded the ordeal, but not much could be done without consumer protections in place to protect gift card customers. Even the attorney general for Missouri declined to interfere.

Then there's the BlackHawk Network, which has its hands all over most things "gift card." You know those physical gift cards for sale in your local grocery store, maybe conveniently near the checkout? BlackHawk Network is responsible for that integration, a concept it launched back in 2001. Since then, the company has had an impressive history of acquiring gift card exchange and sale websites, but its overall record is spotty. Over the last several years, BlackHawk has left a trail of defunct gift card websites, including CashStar, CardPool and Gift Card Lab, and its remaining sites -- including GiftCards.com and GiftCardMall -- are not kept entirely updated. BlackHawk's level of investment in those remaining websites appears low, and whether their customers will see the fate of Cardpool or The Plastic Merchant remains questionable.

Buying a gift card with CardCash

Operated by its founders since 2009, CardCash has been unscathed by the blights plaguing the BlackHawk Network. CardCash is best when you're buying for yourself and want to score extra savings: You can buy partially used or unused gift cards for amounts over $10. The interface is intuitive and tells you the percentage you'll save on each discounted gift card. For example, I saved 1.8% of the value of a $25 Home Depot e-gift card by paying $24.55 for the $25 value. Just note that once you add a product to your cart, you have 20 minutes to check out or your selection may not be reserved. 

CardCash offers a 45-day money-back guarantee on all purchases if something goes wrong with the gift card value. You also have the option of paying with BitPay. When I finalized the purchase, I was notified it would take up to 24 hours to receive my gift card in my inbox, but I received it almost immediately. The gift card itself came in the form of an email attachment.

Buying a gift card through Gift Card Granny

Gift Card Granny has some features that other gift card purveyors lack. For one, you can check out as a guest rather than save all your information (something you can't do with CardCash). And while you're more limited in gift card denominations with Gift Card Granny, you have the option to give e-gift cards to people, much like if you were purchasing through the retailer's website itself.

But unlike with CardCash, the savings are not upfront. You earn cash back on your purchases, though you must create an account to collect it. But that's not all -- you must earn a minimum of $5 cash back to redeem for gift cards, and a minimum of $10 to redeem for cash. Unless you find yourself buying gift cards frequently or at high prices, this isn't a great route for savings. 

Security, though, is a benefit here. When I received the e-gift card, I had to click through from my email to the Gift Card Granny website and input my email address to retrieve the gift code. This helps prevent hackers from accessing your gift card through your email. Gift Card Granny also has a "100% Lifetime Guarantee" on its gift cards. The site claims you'll never have to worry about your purchased gift card losing value or expiring, but the wording is vague. 

Selling a gift card to CardCash

Selling through CardCash is your best and most convenient option for selling a gift card online. You enter the brand name and amount of your gift card, and it makes you an offer. For my $25 Home Depot gift card, it offered me $22. I even had the option to get offers for multiple gift cards at the same time. My redemption choices were direct deposit (ACH payment), PayPal Express or a mailed check. I went with direct deposit, and even though I had to hand over my bank account information, I also had to give my credit card information to place a temporary $1 verification charge for CardCash's security.

Remember not to get rid of your gift card right after you complete your transaction, as it could take up to a day to verify that your gift card is valid. That said, I got an email that my order was accepted less than half an hour later. CardCash also said to allow one to two business days for my money to show up in my bank account, but I had my $22 by the next day. 

Selling a gift card back to the store

It's safe to buy retailer gift cards directly from retailers, but what about selling them back? Most retailers will accept a return on a gift card if you have the receipt and the gift card hasn't been used. Not many will accept a used gift card, however. In some cases, state law may allow you to redeem gift cards with small amounts left on them for cash, according to the National Conference of State Legislatures.

In California, you can generally redeem a gift card with the retailer for cash if it has $10 or less left. If there is $5 or less left on your gift card, you can generally redeem it for cash value in Colorado, Maine, Massachusetts, Montana, New Jersey, Oregon, Puerto Rico and Washington. And if there is $1 or less left, you can generally redeem it for cash in Rhode Island and Vermont.

TL;DR

Buying: If you're looking to buy a gift card, I recommend that you buy it from the retailer online or in-store over a third party. But if you're looking for a discount, use CardCash. If you're trying to send a gift card to someone else, Gift Card Granny is a good bet. Do keep in mind that buying a gift card always comes with risk, and the quicker you use your card, the lower your chance of getting stuck with a gift card from a defunct middleman.

Selling: If you're looking to sell a gift card, CardCash has the greatest level of convenience and service. Generally, retailers will also accept returns on unused gift cards if you have the receipt. Alternatively, you can redeem gift cards with amounts less than $10, $5, or even $1 for cash with the merchants themselves, depending on state law.