CreditSense

Gift cards might not get you Tahiti like miles and points will, but with V-day approaching I thought I’d share the best rewards cards for buying gift cards and using them to hack your way to getting a discount on everything you buy.  No more hunting for the right shiny or good smelling bauble for your special someone before V-day hits.  (I recently proudly bought a nice smelling citrus scent diffuser from France for my wife, which she promptly returned.)  Gift cards and some flowers are my preferred V-day approach.  Not only can you get killer deals on converting points and miles to gift cards, but here’s how you can buy gift cards and save money at the same time.

If you’re going to become a gift card buying rockstar, buy them where your rewards card gives you the most rewards.  For example, several rewards cards will give you extra cash back for purchases made at grocery stores (up to 6%).  With this in mind you can end up getting 6% cash back on nearly any purchase you make if you stock up on gift cards at the grocery store.  Let’s see how this would work with some purchases you might make this week

• Step 1: Make a list of what you’ll be buying in the next two weeks:           

Coffee at Starbucks

Books on Amazon

Songs and Apps on Itunes

A new Jacket at REI

• Step 2: Head to the grocery store and pick up the appropriate gift cards:

Starbucks Gift Card

Amazon.com Gift Card

Itunes Gift Card

REI Gift Card

Since you have a good rewards credit card, you’ll be getting maximum cash back on all your planned purchases for the week.  Grocery store bonus magic!  Stock up on gift cards to places you frequent often and start chopping a nice percentage off of anything you can buy with a gift card.

Here are the cards that will work with this strategy:

AMEX Blue Cash rocks with 6% back

Amex Blue Cash Preferred is king of the gift card discount mountain with a whopping 6% cash back at grocery stores.  Department stores still get 3%, but again, find a gift card for that department store and you’ll be back on top with 6%.  And if you have your own Amazon affiliate account  you can run your purchases through that and get another 4% off for a whopping 10% total discount off the vast world of Amazon.com. The Blue Cash Preferred does have a $75 annual fee to stomach, but you’ll quickly earn that back in rewards when you use the card for  $200 a month on supermarket purchases.  You do get a $100 signup bonus if you spend $1,000 in 3 months to make up for paying the fee the first year.

AMEX Blue Cash Everyday: No Annual Fee

Prefer to ditch the annual fee?, the Blue Cash Everyday card still gives you  3% back on supermarket purchase as well as 2% on gasoline and other large retail stores  I like the Preferred over the Blue Cash Everyday because the annual fee is negligable as long as you follow through with your 6%+ cash back strategy.  The $100 bonus can still be yours with the same requirements as with the AMEX Blue Cash Preferred.

Other Good Cash Back Cards: Chase Freedom, Citi Dividend and Discover More: 5% back on certain categories

Rotating categories for 5% cash back are also standard for the Chase Freedom, Citi Dividend and Discover More credit cards.  Here are the current 5% cash back categories:

• Discover More: Movies, Gas Stations, Museums
• Chase Freedom: Gas Stations, Amazon.com
• Citi Dividend: Health Care, Fitness Clubs, Utilities