Advertiser Disclosure

Paper for Plastic: Exchange Your Gift Cards for Cash with Cardpool

Nov. 3, 2011
Credit Cards
At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

Credit card rewards programs can be a little tricky to comprehend. You earn 4 points on these purchases but only 1 point on those other purchases. You can redeem for 15% more if you spend your points at an online shopping mall or 10% more if you convert your points to gift cards. You’ll get a bonus 20,000 points for signing but only if you spend $3,000 in the first 2 months and make a balance transfer in the first 3, and so on…

For all the fuss and confusion, you’d hope every point carried its weight in gold. But if you’re not careful, your hard earned points will devalue into a fraction of what you deserve. Cardpool can help you avoid that.

Guard your points

Credit card companies reward your loyalty by offering alluring incentives for using their cards. These rewards come in the form of cash, gift cards, airline miles, free hotel stays, etc. But when deciding on a rewards credit card, proceed with caution. Despite flashy offers and a cacophony of earning percentages and signing bonuses, bank credit cards don’t always have the consumers’ best interest at heart.

The standard base rewards rate tends to hover around 1 point per $1 spent. On average, each point is valued at about $0.01, meaning you should get a penny back on every dollar. Card issuers are able to reduce the value of your rewards by demanding a huge number of points, or by steering you to options you neither need nor want. For example, converting points into plane tickets or coffee makers may not yield a fair return rate.

There’s also always the risk that your credit card company will change programs mid-stream and devalue your accumulated points. So it’s always best to redeem early, for cash, and spend your earnings on whatever your heart desires.

Big banks, small rewards

Here’s where it gets problematic. Bank of America and Citibank are two of the largest credit card issuers in the country. Both offer a variety of rewards credit cards. Unfortunately, their points systems — BofA WorldPoints and Citi ThankYou points—are two of the worst among big-name banks. These are stingy programs that skimp on the cash back.

With BofA WorldPoints, you need 25,000 points before you can cash in at the full 1%. If you have fewer points to play with, you’re stuck with offers like $25 cash for 5,000 points. That’s a measly $0.005 per point—half of what you should be getting. With Citi, you can’t redeem cash at a full 1 cent per point, no matter how many points you save, so gift cards are your only realistic option.

But if you’re stuck with one of these rewards programs, or you’re too lazy to switch banks, there is hope. Instead of accepting a paltry cash back rate, or having to save up heaps of points, you can redeem fewer points and squeeze out more cash, by using Cardpool, a website that buys unwanted gift cards at generous prices.

A better way

Here’s how you can beat BofA at their own game. Rather than using 5,000 points to get $25, you can use 6,500 WorldPoints to get a $50 Whole Foods gift card. And if you’re not in the habit of spending $5 apiece for locally-sourced organic grapes, you can sell that gift card on Cardpool right now* for $45.50. That translates to 0.7 cents, rather than 0.5 cents. You juice your return without having to spend a ton of money first.

If you have Citi ThankYou points, Cardpool has even more to offer. To claim $50 in cash, you need 8,000 points, giving you a pretty sad exchange of $0.006 per point. And unlike BofA, no amount of points will ever get you 1 cent per point. Thankfully, they give you a full 1 cent back when you redeem for many gift cards, so you can grab a $50 Wal-Mart gift card for 5,000 points and sell it on Cardpool for $45. That’s 0.9 cents per point—a full 50% better than Citi’s own cash back rate!

Go get yours

Even if you’re stuck in a lousy rewards program, you don’t have to settle for a terrible cash back rate. With Cardpool, you can almost mimic the cash rates of a proper cash back credit card, and get some real paper for your plastic.

* Cardpool’s prices change occasionally, so please double check before trying this at home.