An internet troll laughed at me for buying a “real” gift card instead of a Visa gift card. That made me wonder if he was right or not. Let’s do the math on this and figure this out together. Let’s assume instead of me buying 6 x $50 Home Depot gift cards, I bought 3 x $100 Visa gift cards at a fee of $5.95 (not sure if that was the correct fee or not). Let’s also assume the cashier knew how to split a payment between 2 of my AMEX cards. Let’s do the math here.
Home Depot gift cards
I bought $300 of Home Depot gift cards for a price of $150 (6 credits of $25)
Visa gift cards
Let’s say I still needed $300 in Home Depot gift cards for this example, but I had decided to buy $300 in VGC at Smart & Final instead. This would have cost me $318, and then I’d unload onto my Serve/RB for free. Now let’s say I then go to Staples.com and buy $300 in Home Depot gift cards through a 2X portal using my Ink card 5X, which should pay out per the Frequent Miler’s lab. That means I’d net 7X miles and let’s conservatively value them at 1.5c each, that means I’d get a return of $300 x 7 = 2100 miles * $0.015 = $31.50. The full math:
- $300 Home Depot Gift Cards at Staples – $300
- Visa Gift Card cost at Smart and Final +$18
- Cost = $318
- AMEX Offers -$150
- Portal/Ink Credit – $31.50
- Total – $136.50
Conclusion
So what just happened here? Looks like the internet troll was right after all. So if you’re reading this Mr. internet troll, you were right. Because I bought the Home Depot cards at S&F, I didn’t consider the opportunity cost of being able to buy the Home Depot gift cards at Staples instead to earn 2100 miles, which has a value of $31.50. So while I thought I was being smart and not wanting to lose out on $18 in “value,” it backfired on me once you consider the opportunity cost. By the way, this would not have worked with $50 Visa cards since that would have cost me an extra $18 (assuming $6 per card too) – $136 + $18 = $154. In that scenario, buying the HD GC’s directly from S&F was a better deal. And you know I would have had to profile my S&F cashiers much more to see who looks like they would know how to do a split tender purchase. =)
There is only an opportunity cost if you would have otherwise NOT reached 50k in 5x spending on ink already in a year. I suspect you already do that. If you can already find ways to use up 50k on ink, you didn’t lose anything in your epic S&F run.
Good point George.
I guess this is taking it even one step further, but what value of time do you give yourself to schlep out to load your Serve/RB and then head out to Staples/Office Depot and buy the home depot cards? I’d conservatively gauge that as an hour of extra work…
Booshala,
That’s a valid argument. Can we all agree that the time to load Serve/RB is a sunk cost since I would have done it anyway? The incremental cost would be the extra hassle of loading it with $100 cards instead of say $500 cards, which would be extra time at the cashier, but it’s not high enough to say I’d have to incur an extra drive out there.
As for the Staples, I would buy that through a portal at home, so no extra time there.
Other issue is you lose warranty/return protection if you use Home Depot GCs for purchases rather than a good credit card. Not an issue at PF Chang’s but at Home Depot…
Good point. I hope most people won’t buy big ticket items with GC’s.
Agree. Love my amex for their return protection and purchase protection.
How would you get 5x if you paid for the home depot GC’s using the visa GC’s? Would that not be just 2x? You should work out the math considering the same initial investment and same end result. So, your comparison scenarios would be:
1. Buy $300 HDGC from S&F directly
2. Buy $300 VGC from S&F and convert to HDGC @ Staples
In the scenario you outlined above, you would be left with $300 HDGC and $300 VGC (unless I am not understanding it).
On the other hand, if you were treating both of these as separate transactions (buying VGC vs. buying HDGC), then it would not be fair to factor in the $150 amex credit into the HD equation (since you would have got the $150 anyways even if you did not buy the HDGC)
KP,
I am not buying the HD GC’s with Visa GC’s. I am loading those Visa GC’s to my BB/RB for “free.” Then I am then using my Ink card for 5X at Staples to buy the Home Depot gift cards as a separate transaction. Then I am paying back my Ink card using the $300 in my BB/RB account.
If I treat them as separate transactions, yes, I could buy the HD GC’s any day for $269 with my Ink combo, and it may not be fair to factor in the $150 SF credit. But the counterargument to this is that I would NOT have bought HD GC’s if this deal didn’t come up. To maximize this deal, I should have bought the VGC’s and then taken that cash to buy the HD GC’s using my Ink card. Maybe someone else can explain this logic better.
I think the math is correct, but there’s one minor issue is that the store clerks tend to scrutinize visa/mc purchases more than store cards. I will probably do a 50/50 mix in my June SF run
Agreed. I think the more affluent neighborhood would be fine with it if the cc and ID matched.