Gift Card Arbitrage: An Introduction

Welcome to my dirty secret.  I sell gift cards.  Lots of them.

I’m not walking up and down the streets “Geeeeet your gift cards here!”  But I am turning them and making a profit.  When you boil it down, gift card arbitrage (fancy name for reselling them) is commerce at it’s simplest form.

Find something.  Add value.  Sell for higher value.

Although with gift cards, it’s really more like this:  Find a gift card at a great deal.  Sell for market price.  The marginal profit between your buy rate and your sell rate is yours to keep!  I’d be remiss if I didn’t mention the ability to earn credit card points/miles on the purchases, as well as the occasional shopping portal pay out!

So, let’s figure out how it works.

I’ve mentioned selling gift cards before, but haven’t really gotten into it on the blog.  Racking my brain for what to post this week, I remembered all of the things I should be doing, instead of just sitting in front of the computer all day.  Near the top of my To Do List:  buy gift cards at _______ with my ______ card, and _______ cards at ______ store with the _______ card.  You can virtually always find that on my list.  Every week.

It’s not super glamorous, but it keeps me busy, and brings in a bit of extra cash (not to mention points and miles!).  Side hustle nation, am I right?

A day in the life

As you may have guessed by now, I’m writing this post because this weekend had some great reselling opportunities for me!  I had a few deals to take advantage of over the weekend, so I managed to make some money.  I’m not going to oust any specific deals or coupons here, but suffice to say there are enough deals to line your pockets with gift cards every week.  (If you read between the lines, I’m sure you can figure out the stores I went to!)  I started arbitrage in earnest in March of 2016, and I managed to move over $31,000 of gift cards through the end of the year!  (And that’s not even a fraction of what some of the guys I know do…)

Today I came home with a pile of cards:

  • 11 x $100 Uber gift cards (paid $97.48/card)
  • 3 x $50 Google Play gift cards (paid $47.98/card)
  • 1 x $25 Sam’s Club gift card (paid $25/card)
  • 1 x $10 Sam’s Club gift card (paid $10/card)
  • 6 x $10 iTunes gift cards (2 packs of 3 each, paid $8.50/card or $25.50/pack)
  • 1 x $200 Neiman Marcus e-gift code (paid $200)

I split these purchases between three stores.  At Store 1, I bought the Uber, Google Play, and Sam’s Club cards (hint, hint…).  Then the iTunes and Neiman Marcus were from Store 2 and Store 3, respectively.

At Store 1, I had a deal for $250 off my purchase!  So the math for Store 1 looks like this:

Store 1 = (Uber cards) + (Google Play cards) + (Sam’s Club cards) – $250 Deal

(11 x $97.48) + (3 x $47.98) + ($25 + $10) – $250

($1,072.28) + ($143.94) + ($35) – $250

$1,251.22 – $250 = $1,001.22

I spent a total of just over $1,000 at Store 1.  Then at Store 2, I had 5% off…

 Store 2 = (iTunes cards) x (100%-5%)

(6 x $8.50) x (95%)

$51 x .95 = $48.45

We stopped by Store 3 for $50 off.  The key to gift card arbitrage here is stacking deals.  I’m stacking promotions on coupons on credit card points.  (We’ll tally the credit card points up at the end.)

Store 3 = (Neiman Marcus card) – ($50)

  $200 – $50 = $150

So, across all three stores, I spent $1,199.60.  In truth, I split up this spending between my Alaska Business card and my Starwood Business card, but for simplicity, let’s say I put it all on the SPG.

Selling the gift cards

Now you have a pile of gift cards, what to do with them?  Well, unless I’m planning to book a cross-country road trip with Uber, I better start selling those cards.  The most important thing you want to do is find the best sell rate for the cards.  Gift Card Wiki handily outlines the prices of many sites, but doesn’t capture all of them!  My favorite team of resellers is over at The Plastic Merchant.  They do a fantastic job and often have the best rates, though payment does take a bit longer than some reselling sites.

Your timeframe is the second most important thing to keep an eye on.  If you need to flip cards fast, sell them.  Sell them as soon as possible, you can’t always wait and hope rates will go up.  If you can afford to wait a bit longer, and you think the market is flooded, by all means, hang onto the cards.  Just be careful you don’t wind up with cards nobody wants; they’ll end up burning a hole in your pocket!


Be careful whom you sell to though, I still haven’t been paid for 2 cards I sold to Monster last year!

Alright, the important thing here is the rate at which a company will buy your gift cards.  The rate is listed as a percentage.  Let’s look at Neiman Marcus on Gift Card Wiki.

A number of places will buy the cards, both physical and e-gift cards.  Since the prices are listed in percentages, it doesn’t matter what the value on your gift card is.  The Neiman Marcus rate on CardKangaroo is 83%.  Sell a $100 Neiman Marcus card to CardKangaroo, make $83.  $200 card?  $164 in your pocket, you get the idea.

Now, you can also put the cards out to market, on a site like Raise.  I prefer to sell at a fixed price, personally, so I’m going to focus on that for this post.  If you’d like more info on market-style selling, let me know in the comments and I can write up another post!

I got decent rates for these cards when I sold them.  The Uber cards came in at 89%, Google Play cards 87%, and iTunes and Neiman Marcus both at a respectable 84%.  We want to look at profit on a “per card” or “per item” basis, to make sure we’re maximizing each deal.  I don’t include credit card points until the very end.

  • I bought Uber at 78% (rounded up) after the deal,
  • Google Play at 76%,
  • iTunes at 80%,
  • and Neiman Marcus at 75%.

If you like numbers, you already see where I’m going with this.  At the end of the day, the price only matters for tallying up your credit card points.  What you really care about is the profit margin.  With gift cards, this is easy to calculate.

Percentage cards sell for – Percentage paid for cards = Profit margin (in percent)

Uber, for example…

89% (sell percentage) – 77.5% (paid percentage) = profit margin of 11.5%!

Google Play profit = 87% – 76% = 11% profit margin

11% in the gift card arbitrage game is a great profit margin!

iTunes profit = 84% – 80% = 4% (profit margin in this range is more common)

Neiman Marcus = 84% – 75% = 9% profit margin

A successful weekend!

Ok, profit margin sounds cool and all, but how much did you actually make?

Now we add everything up.  Don’t worry, it’s easy!

Basically you want this:

(Profit Margin) x (Dollar Value of Card) x (Number of Cards) = Total Profit

Let’s start with Uber again…

(Uber Profit Margin of 11.5%) x ($100 Card Value) x (11 Cards) = Total Profit

Now convert that profit margin percent to a decimal so we can work with it…

(.115) x ($100) x (11) = $126.50

Over $150 profit on the Uber cards!  Here are the rest:

Google Play profit = (.11) x ($50) x (3) = $16.50

iTunes profit = (.04) x ($10) x (6) = $2.40

Neiman Marcus profit = (.09) x ($200) x (1) = $18.00

Add all those up for my total weekend profit:

$126.50 Uber profit + $16.50 Google profit + $2.40 iTunes profit + $18 Neiman profit = $163.40 Total Profit

What about the credit card points?!

You thought I’d forget about credit card points??  No way, save the best for last right?

We agreed that I put all the spend on my Starwood card above, remember?  On that one, I’m earning 1 SPG point/$ spent, and let’s call each point worth about 2.5 cents.  So that $1,199.60 total spend from above is just about 1,200 SPG points, worth $30.

Add that $30 to the total profit found above, and you’re at $193.40, not bad for a weekend side hustle!

Sounds a little sketchy…

Well, honestly, it can be.

Shoot, that won’t get you excited about selling gift cards, will it?

Listen, there’s always risk in business.  Every business.  Here are the top three, as I see them:

  • The market could be flooded.  We can see this in action on the historical trends from Gift Card Wiki, for example.  There are definitely seasonal swings in the market as well.
  • You could lose the gift cards.  I try to stay really organized with this, but it’s still tough.  For someone that doesn’t like spreadsheets, it may not be worth a deep dive.
  • Or worse yet, the cards (or e-cards) could be stolen or compromised!

The reason I resell gift cards more frequently than merchandise, is that gift cards happen to be a bit more stable (I think).  Plus, they take up a fraction of the space that real merchandise does.  Storage space in my Boston apartment would be pretty tight with anymore boxes of junk lying around.  Though I still sell the occasional item on Ebay, most of my reselling is gift cards now.

When you buy a $100 gift card, that’s it.  It’s worth $100 at that particular store.  $100 to Nike will always be $100 Nike.  Of course, you can’t sell it for $100 on the market.  Don’t forget, the buyer is taking on some risk too.  They’ll be thinking about whether or not the gift card is real, if the stated value is actually on the card, and who do they talk to if they have any issues?  For 100% value, the consumer is just going to go straight to the store, rather than worry about your sketchy gift cards.

So, that’s what I did this weekend, how about you?

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