Can You Get Cashback With a Gift Card?

Gift cards are a popular and convenient way to give a present, functioning as prepaid stored-value cards issued by retailers or banks. Many people wonder if these cards can be converted into cash, especially if they do not intend to use them for their original purpose. The ability to exchange a gift card for direct monetary value is a common inquiry, reflecting a desire for financial flexibility.

The General Rule Against Direct Cashback

Merchants and gift card issuers generally do not allow direct cash redemption for gift cards. These cards are designed as store credit, encouraging future purchases within a specific brand or retail environment. Most gift card terms and conditions explicitly state they hold no cash value and are not redeemable for cash, except where required by law.

Businesses use gift cards as a marketing tool to secure future sales and attract new customers. When a gift card is purchased, the issuer receives funds upfront, expecting the recipient to spend at least the card’s value. Allowing direct cash back would counteract this business model, turning a marketing instrument into a simple cash equivalent. This policy ensures that the funds remain within the merchant’s ecosystem.

State-Specific Exceptions for Low Balances

Despite the general rule, certain state laws allow gift cards to be redeemed for cash under specific circumstances. These laws typically apply to cards with low remaining balances, often under $5 or $10, ensuring consumers are not left with unusable small amounts.

These laws protect consumers from losing residual value on their gift cards. When a card’s balance is minimal, it can be difficult or inconvenient to spend the exact amount. To request cash redemption, a consumer typically needs to present the gift card at the point of sale or contact the card issuer’s customer service. The process usually involves verifying the balance and then receiving the cash equivalent for the remaining amount.

Methods to Convert Gift Cards to Cash (Indirectly)

Since direct cash redemption is rare, individuals often explore indirect methods to convert gift cards into cash.

One common approach involves using online gift card marketplaces, which allow users to sell their unwanted gift cards for a percentage of their face value. These platforms typically offer between 70% to 90% of the card’s value, providing a practical way to liquidate unused cards. Another option is utilizing gift card exchange kiosks, often found in grocery stores or malls, which offer instant cash for gift cards, though usually at a lower percentage than online marketplaces, sometimes ranging from 60% to 80% of the card’s value. Selling the gift card to friends or family can also be a straightforward way to receive the full face value.

A strategic way to effectively “cash out” a gift card is by using it for essential purchases already planned and budgeted for. For example, using a grocery store gift card for groceries frees up cash that would have been spent on those items. This method indirectly converts the gift card’s value into spendable cash within one’s personal budget, without incurring any fees or losing a percentage of the card’s value.

Important Considerations Before Cashing Out

Before converting a gift card to cash, review its specific terms and conditions. These terms often detail expiration dates, dormancy fees, or redemption rules that could affect the card’s value or usability. Understanding these policies helps in making informed decisions.

Indirect methods often result in receiving less than the card’s face value. This reduction accounts for the service fees of the platforms or the convenience offered by immediate exchange options. When using online platforms or kiosks, verify the gift card’s current balance for accuracy. Exercise caution and use reputable services for selling or exchanging gift cards to avoid potential scams and ensure transaction security.