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Canadian Credit Cards > Credit Card News > Do online gift card exchanges really save you money?

 
 

Do online gift card exchanges really save you money?

By Daniel Workman

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Gift cards represent a $6 billion industry in Canada, with an estimated 15 per cent of gift cards going unused.

gift-card-restrictions

That's about one billion dollars in wasted cash or roughly $300 per household, at a time when many Canadian families desperately need money to pay their bills. Most gift cards are restricted to specific retail outlets. CardSwap.ca is a Canadian online exchange that strives to overcome that constraint by enabling consumers to buy and sell gift cards on its website.

Recently, CreditCards.ca evaluated CardSwap's offerings. Here's what we found:

Limited card choices
CardSwap advertises that it generally has hundreds of gift cards available. During our test, we identified only 73 distinct gift cards for buyers to choose from. Although CardSwap lists 12 gift card categories ranging from electronics to shoes, half of those categories had two or less cards.

Available gift cards were concentrated into two categories. Over a third of CardSwap's cards were for books, movies and music products. The second-most populated category was clothing, which represented almost one quarter of all listed cards.

Overall, the 12 categories lacked popular items like gas gift cards that are much in demand due to skyrocketing gas prices. Similarly, no home renovation gift cards were available.

Low card amounts
Most gift cards on the CardSwap site had low face amounts. Only six cards were valued at approximately $200 to $350. Two of those higher-dollar cards were for spas, one of the least-desired gift card categories.

Among the remaining cards, about 60 per cent had values ranging from $20 to $50.

Some consumers want to use discounted gift cards to buy big ticket items. However, CardSwap restricts buyers to one card from the same merchant per seven-day period.

It would take 10 weeks to accumulate enough $50 Sony or Best Buy gift cards to buy a new high-definition television priced at $500. By then, special promotional pricing will have expired.

Getting real with buyer discounts
CardSwap promotions claim that savvy Canadian shoppers can save up to 40 per cent on exchanged gift cards. However, we found that most cards offered much lower discounts. The largest percentage savings was 30 per cent for a $100 movie theatre gift card.

In our test, the average discount was 13 per cent. That translates to an average savings of $11 per gift card. About 75 per cent of CardSwap buyers will save between $2 and $15.

Consumers need to be realistic in their expectations about how much money they can save -- and how much time they should spend searching the CardSwap website. CardSwap does offer a free ‘wishlist feature' that automatically emails you when specific gift cards become available.

Alternatives to gift card exchanges
CardSwap appears to be a reputable e-commerce site, with a strict customer privacy policy and a consumer protection plan for customers who register complaints within 21 days of buying a card. Payments are secure and must be made by credit card or debit.

Still, you can probably find higher average savings than 13 per cent by shopping for specials from your favourite retailers either online or at their stores. Because gift card exchange savings are modest, you may even pay more for gas expenses driving to a distant retail outlet to spend the discounted gift card.

As for buying gift cards to give to other people, it may be wiser to choose Visa or MasterCard pre-paid gift cards. These pre-loaded cards allow recipients to spend on whatever they want, rather than be constrained by unwanted and store-specific gift cards bought at discounted prices from online exchanges.

 


Published: May 16, 2011