Gift Cards and Loyalty Points: Making Them Go Further

Gift cards and loyalty points are usually treated as an afterthought. Used deliberately they are a genuine discount mechanism, and a few of the conversion rates available are surprisingly generous.

Discounted gift cards

The basic idea: buy a retailer’s gift card for less than face value, then spend it. The difference is a discount on everything you buy there.

Where they come from:

• Employee benefits portals. Many employers offer discounted gift cards for supermarkets and major retailers. This is one of the most under-used benefits in the country — check what your employer provides.
• Cashback sites, which sometimes sell gift cards at a discount or pay cashback on their purchase.
• Union and professional body schemes.
• Supermarket promotions offering bonus points or money off when you buy third-party gift cards.

The trick is to use them for regular, unavoidable spending — the weekly grocery shop, fuel, DIY supplies. A few percent off everything you already buy is a permanent saving that requires no behaviour change.

Loyalty points: check the conversion rate

Most people spend points as money at the same shop, which is usually the worst available rate. Several schemes let you convert points into vouchers with partner businesses at a multiple of their cash value — commonly for restaurants, attractions, cinemas and days out.

Before spending points at face value, check what conversion options exist. If your points are worth two or three times as much converted, and you would use that partner anyway, that is a large effective discount.

Two cautions. First, only convert if you would genuinely have spent money there — a boosted rate on something you did not want is not a saving. Second, schemes change their conversion rates and partners regularly, and sometimes at short notice.

Member pricing

Several major supermarkets now run loyalty-card-only prices, where the shelf price is meaningfully higher without the card. If you shop there, the card is no longer optional. Scan it every time.

Do not let member pricing stop you comparing across supermarkets though — a discounted price at one shop can still be higher than the standard price elsewhere.

Stacking properly

The order matters. A rough sequence for an online purchase:

1. Compare retailers to find the genuinely cheapest.
2. Check whether a discounted gift card is available for that retailer.
3. Go through a cashback site.
4. Apply a discount code listed on the cashback site.
5. Pay with the gift card, topping up with a rewards credit card you clear monthly.

Not every step works everywhere — some retailers exclude gift card payments from cashback. Check the terms rather than assuming.

The risks worth knowing

• No protection if the retailer fails. Gift card holders are unsecured creditors and usually get nothing. Do not hoard large balances, and spend cards promptly rather than saving them for a rainy day.
• Expiry dates. Many cards expire, commonly after twelve or twenty-four months. Check and diarise.
• Dormancy fees. Some cards deduct a monthly fee after a period of inactivity.
• Little protection if lost. Treat a gift card like cash. Register it if the retailer allows.
• Section 75 does not usually apply to the goods you buy with a gift card, because the card purchase and the goods purchase are separate transactions.

Gift card scams

Worth stating plainly: no legitimate organisation will ever ask you to pay by gift card. Not HMRC, not the police, not your bank, not a utility, not a court. Anyone asking you to buy gift cards and read out the codes is committing fraud, without exception.

Also be wary of buying discounted gift cards from unofficial resellers or auction listings — cards obtained fraudulently get cancelled, and you lose the money.

Unspent cards

Most households have some. Gather them up, check balances online, and use them. If you will never shop there, some can be sold or exchanged, though you will take a discount doing so. Better than letting them expire.