How to Withdraw Money From a Gift Card

Gift cards serve as popular payment instruments, offering convenience for both givers and recipients. Many individuals seek to convert gift card value into cash. While gift cards function as a form of prepaid currency, they are not designed for direct cash exchange like funds in a bank account. Understanding gift card types and limitations is a necessary first step before exploring methods to access their value.

Understanding Gift Card Types and Limitations

Gift cards fall into two categories: closed-loop and open-loop. Closed-loop gift cards are specific to a single merchant or a limited group of affiliated merchants, such as those issued by a particular retail store or restaurant chain. These cards can only be used for purchases at the designated establishment, which means their value is restricted to that specific brand’s offerings. They function similarly to store credit rather than universal currency.

Open-loop gift cards are branded with a payment network logo, such as Visa, Mastercard, or American Express. These cards are accepted by any merchant that processes payments through the associated network, like a standard debit or credit card. Despite broader acceptance, open-loop cards are issued as prepaid instruments, loaded with a fixed amount of funds and not linked to a bank account. This limits their functionality compared to traditional banking products.

Gift cards, regardless of type, are not structured for direct cash withdrawal at an ATM or for receiving cash back during a purchase. Their purpose is to facilitate the purchase of goods or services from vendors or across a payment network. Card issuers design these products to manage spending and reduce fraud, so they lack features like ATM access or direct fund transfers. Converting gift card value into cash requires alternative strategies.

Strategies for Accessing Gift Card Value

Several approaches can convert a gift card’s value into a liquid form. Each method has considerations, including potential fees or a reduction in face value. Understanding these options helps individuals choose the suitable path for their gift card type and financial needs.

Selling Your Gift Card

Selling unwanted gift cards through various channels is a common strategy. Online gift card marketplaces, such as CardCash or Raise, allow individuals to list cards for sale at a discount to face value. These platforms act as intermediaries, verifying balances and ensuring secure payment. The discount varies based on demand for the retailer’s card.

Gift card exchange kiosks, found in retail locations, offer an immediate, though less lucrative, option. These automated machines provide an instant cash offer, lower than online marketplaces. Immediate payment is balanced against a lower payout rate. Private sales to friends, family, or through local online classifieds can yield a higher percentage, but lack the security and verification of dedicated marketplaces.

Using it for Indirect Cash Access

Indirect methods can convert gift card value, though they have caveats. One approach involves purchasing an item with the gift card and returning it for cash. Many retailers issue refunds for gift card purchases as store credit, not cash. Receiving cash for a return depends on the store’s return policy and may require a cash register system that can process such a transaction.

Open-loop gift cards, due to wider acceptance, can be used to pay bills or purchase money orders, indirectly converting their value into a transferable form. Not all bill payment systems accept prepaid cards, but some utility providers or online payment services might. Purchasing a money order with an open-loop gift card, if accepted, converts the card’s value into a negotiable instrument that can then be cashed. This method involves a small fee for the money order.

Utilizing Open-Loop Gift Cards as Debit Cards

Open-loop gift cards with a Personal Identification Number (PIN) can expand their utility. If an open-loop card has a PIN, it may be used for ATM withdrawals, similar to a debit card. This functionality is not universal, and when available, it incurs ATM transaction fees, ranging from $2 to $5 per withdrawal. Open-loop gift cards have daily withdrawal limits.

Another option for open-loop cards with a PIN is to request cash back during a point-of-sale purchase. This process is similar to getting cash back with a debit card, where cash is added to the transaction and provided to the cardholder. While free, cash back availability depends on the retailer’s policy and payment processing system capabilities. Not all merchants offer this service, and limits may apply.

Converting to Other Financial Instruments

Open-loop gift cards may allow transfers to other financial instruments, though this is less common. Prepaid cards or digital wallets may allow loading funds from an open-loop gift card. This process involves registering the gift card online and linking it to a digital wallet service like PayPal or Venmo. If successful, funds can be transferred from the digital wallet to a linked bank account, converting the gift card value to cash. Transfers may involve processing fees or minimum transfer amounts, and availability depends on the card issuer and digital wallet platform’s policies.

Essential Steps Before Conversion

Before converting any gift card, preparatory steps ensure a smoother process and avoid unexpected issues. These checks provide clarity on the card’s exact value and any restrictions that might apply. Understanding these details upfront can save time and prevent potential frustration during the conversion attempt.

The first step involves accurately checking the gift card’s remaining balance. Most gift card issuers provide multiple ways to do this, including checking online through their dedicated website, calling a toll-free number listed on the back of the card, or inquiring at a physical store location. Knowing the precise balance is important for any transaction, especially when selling the card or planning a purchase. An incorrect balance could lead to issues during a sale or a failed transaction.

Reviewing the terms and conditions associated with the specific gift card is also important. This information, often found on the back of the card or on the issuer’s website, details various policies that could affect its usability and convertibility. These terms might include activation fees, dormancy fees that reduce the balance over time if the card is not used, or expiration dates, which can render the card worthless after a certain period. Understanding these provisions helps in making informed decisions about the urgency and method of conversion.

Finally, it is prudent to understand any potential fees associated with the chosen conversion method. Selling a gift card through an online marketplace, for example, typically involves a percentage deduction from the face value, which is the platform’s service fee. Similarly, using an open-loop gift card for ATM withdrawals often incurs fees charged by both the card issuer and the ATM operator. Being aware of these costs beforehand allows an individual to calculate the net amount of cash they can expect to receive from the gift card’s value.