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Leverage: A bank (sort of) for your gift cards

Register plastic gift cards at Leverage, and the company will keep track of your cards and their balances, send offers from cards' retailers, and pay you interest on unused balances.

On Monday, November 26, Leverage will open up its gift card management service. It will be the place for you to register all those plastic cash cards you get from people who want to give you a gift but don't want to give you a gift. The service will track all your cards and the balances you have on them, let you buy and swap cards, send offers your way from the retailers whose cards you're holding, and pay you interest on the unused balance on your cards--which is weird, when you think about it for half a second.

Paying interest on the cards is bizarre because Leverage isn't actually holding onto money for you that it's putting to work to make money for itself, which is how interest normally works. Instead, Leverage pays interest as a gimmick to get you to use the service. It pays out 3.65 percent APR for cards purchased on its site, 1 percent for cards you purchase elsewhere, provided Leverage's system has a link to the card's issuer and can confirm its value.

Leverage knows how much money you have left on your gift cards. Leverage

I can see good value in this service for consumers. It's a lot easier to check a single site for information on the cards you have, compared with the alternative: manually tracking your cards' leftover values, or finding the issuers' sites to look up cards one by one. Also, since Leverage knows the stored value of each card that's registered, it can enable the fraud-free exchange of cards among users. Leverage co-founder Jennifer Mathe told me there's about a 30 percent fraud rate on gift card sales on eBay.

The value to retailers, though, is even better: through this site, they now have a way to reach people holding their cards. They can send them discounts or offers to get them to spend their stored cash. One might think that issuers would rather not remind people that they have a credit, since unspent cards or "breakage," are free income for them. But since half of cardholders spend more at a store than the value of the card they have, and since they're more likely to shop at a store again once they've purchased something there the first time, there's a real benefit to the stores to get cardholders to spend down that money. Leverage charges retailers for access to this marketing channel.

Leverage also sells cards directly, as I said, and that's another revenue stream, since it buys them at a discount to face value.

When I talked to Mathe and Leverage CEO Mark Roberts, they told me that they had links into the gift card programs of 72 retailers, such as Home Depot (the biggest gift card vendor of them all), Macys, and Barnes & Noble. They hope to have 100 vendors lined up by the time they launch next Monday.

Personally, I don't like gift cards (money is such a coarse gift), but I do like this business. It's a bit like Mint (Webware review) for stored value. It won't spend your money for you, but it will tell you where it is and how to use it more wisely.

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