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Gift card exchanges can save you up to 35 percent

Savvy shoppers can buy gift cards at steep discounts using online marketplaces, such as Cardpool, Gift Card Granny and Raise, to pay for holiday gifts.

Raise estimates that consumers will save more than $40 million this holiday season through buying discounted gift cards on its platform alone.

"People are actually using gift cards now as coupons," said Meghan Anders, Raise's chief of staff.

The amount you save depends on the popularity of the brand. The more popular or ubiquitous the merchant, the lower the discount.

For example, you can buy a Target gift card at Gift Card Granny with a 5.6 percent discount as of Nov. 22. By contrast, you can purchase a card for New York & Company, a wear-to-work clothing retailer for women, at 35 percent off face value at Cardpool.

The discounts on cards at online exchanges are based on supply and demand, said Patrick Ramsey, Cardpool's general manager.

"The holiday season increases the demand for gift cards, and people are buying ahead of time for the brands where they plan to shop," Ramsey said.

Many gift card exchanges offer mobile apps that allow you to purchase discounted cards immediately and use them while you shop.

Cyber Monday shoppers and others can download a Chrome browser extension from Gift Card Granny to optimize their online purchases. The extension will automatically check the exchange to find discounted electronic gift cards that would save you money for your specific purchase.

Some online exchanges also reward loyal customers.

Raise will give you $5 for every person you refer who joins and makes a purchase on the marketplace. Meanwhile, Gift Card Granny has a loyalty program where people can earn points toward $5 discounts on their purchases of gift cards.

Trade gift cards in for cash

Half of people say they plan to give a gift card this holiday season, yet only 27 percent want to receive them, according to a recent Bankrate survey.

"People end up with a drawer full of unused or partially used gift cards," said Trae Bodge, a smart shopping expert at Gift Card Granny.

Gift card exchanges can help you fund your holiday shopping spree by trading in those unwanted cards for cash.

Sellers of gift cards can earn 80 cents or more on the dollar, depending on the popularity of the brands.

People tend to pay more for plastic cards rather than online ones because buyers usually want to give them as gifts rather than use the cards themselves, Ramsey said.

For example, you could sell a $100 Apple store gift card immediately on Cardpool for $84 or mail it to the exchange for an $89 payment as of Nov. 22. Meanwhile, a $100 Old Navy card will sell for $65 for the online version and a plastic one will go for $70.

Some gift card exchanges, such as Cardpool, buy and sell gift cards themselves while others, like Gift Card Granny and Raise, act as peer-to-peer marketplaces.

Listing your gift card on a peer-to-peer marketplace may take longer, but it may help you get a better price than if you were to sell it directly to an exchange, Bodge said.

Tips for gift card buyers and sellers

Gift card exchanges are a relatively new market.

Only 13 percent of consumers said they have purchased a gift card from an exchange site, according to a September survey from Blackhawk Network, the parent company of Cardpool. However, 48 percent said they would consider using an exchange service to buy or sell gift cards.

Here's what you need to do if you buy or sell a gift card on an exchange:

  • Use an exchange that provides purchase protection and return policies. The major exchanges offer these benefits. Buying gift cards on sites without those protections, such as Craigslist, increases the chance that you may lose money from purchasing goods from unverified sellers.
  • Pay with your credit card. This limits your liability from unauthorized transactions.
  • Go for gift cards, not prepaid cards, which may have hidden transaction fees associated with them.
  • Trust, but verify. As soon as you receive you card, double-check that it is in the amount you paid for by contacting the card issuer.