Should you be buying American Express gift cards?

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[update 3/27/14: I've added a link to BeFrugal below, where you can earn 3% cash back on American Express gift cards, the best offer I'm currently aware of. Thanks to @rajiv1po on Twitter for alerting me to that deal.]

One opportunity that has really taken off in the last year or so has been American Express gift cards. These are prepaid, American Express-branded cards that can be purchased online and loaded with up to $3,000 each.

American Express gift cards are not PIN-enabled as most Visa and MasterCard gift cards now available are. Instead, they can be used only as credit cards for in-person or online transactions. That means that many of the easiest methods of prepaid and gift card liquidation are not available. For example:

  • Walmart money orders;
  • Walmart bill payments;
  • Evolve Money bill payments;
  • in-person Bluebird and Gobank loads.

The only options for liquidation are those where it's possible to use an American Express credit card to begin with:

  • Purchasing prepaid reload and gift cards;
  • Loading Serve cards in-store at CVS or online;
  • Amazon Payments;
  • Kiva loans;
  • etc.

In other words, American Express gift cards are not an option to increase the amount of spend you manufacture each month, since the cards themselves consume manufactured spending bandwidth you would otherwise be able to use on credit cards directly.

So why buy them?

Use cash back portals for fun and profit

The reason you might consider paying American Express an additional fee to route your manufactured spend through their gift cards is that these gift cards are eligible for airline miles and cash back through a number of shopping portals. Here are some currently available offers, although these do change regularly:

  • Barclaycard Arrival RewardsBoost: 2 miles/$. Worth 2.22 cents towards travel redemptions;
  • TopCashBack: 2% cash back;
  • BigCrumbs: 1.2% cash back;
  • Delta SkyMiles Shopping: 1 mile/$;
  • Alaska Mileage Plan Shopping: 1 mile/$;
  • [Update 3/27/14: BeFrugal: 3% cash back.]

As long as you don't make the purchase with a Citi-issued credit credit card, then in addition to the points you earn through whichever shopping portal you choose to use, you'll also earn your credit card's rewards currency.

Limits and warnings

Frequent Miler has done the lord's work compiling some frequently asked questions about American Express gift card purchases. Some highlights:

  • Don't use Citi cards [or US Bank Club Carlson - update 3/28/14: see the comments for more datapoints] credit cards for your purchase, as they'll incur cash advance fees and won't earn rewards;
  • Log into your American Express account to see the option to buy gift cards up to $3,000 in value (otherwise you're limited to $500 cards);
  • Personal gift card orders are limited to $5,000;
  • Business gift card orders are limited to $75,000;
  • There are undisclosed time limits on orders as well.

As they say, read the whole thing.

My shopping portal ritual

Historically, I've had terrible luck getting my shopping portal purchases to track correctly. Here's my system for increasing the likelihood of receiving my portal bonuses (I use an Apple computer):

  • Close all open Safari windows and tabs;
  • Turn off private browsing;
  • In the top left corner, click "Safari" and select "Reset Safari..."
  • Make sure all the boxes are checked, and click "Reset;"
  • Open the shopping portal and click through to desired merchant, making the purchase immediately;
  • If I have to remove any items from my shopping cart, I start the process over from scratch.

It's certainly a little bit paranoid, but since I've started using this system all my portal purchases have tracked successfully.

My Experience with Barclaycard RewardsBoost

In the spirit of this month's manufactured spending competition, I decided I'd do my first experiments with American Express gift cards. The best available portal offer I found was for 2 Arrival miles per dollar, so I decided to click through the Barclaycard RewardsBoost portal. Now that my miles have posted, I can share the timeline of my purchase so my readers will know roughly what to expect if they do decide to pursue this opportunity.

  • March 8: order placed for $2,0xx, including $9.95 shipping fee. Used promo code "SYNCGIFT" to waive purchase fee. Received order confirmation;
  • March 8: pending charge appeared in my online banking;
  • March 10: received e-mail from American Express saying my order had been approved;
  • March 10: pending charge disappeared from online banking;
  • March 14, 3:08 am: received e-mail from American Express saying my order had shipped;
  • March 14, 9:39 am: delivery received from UPS;
  • March 15: charge posted to my online banking and Arrival miles received for amount of transaction;
  • March 26: RewardsBoost miles posted to my account and I received an e-mail notification from RewardsBoost. I received miles for the amount of the gift card, but not for the $9.95 shipping fee.

There were a couple weird things that are worth drawing your attention to. Usually when you make a purchase with a credit card, it appears as a "pending" charge, then clears as a "posted" transaction within a few days. In my case, the charge disappeared completely for several days, reappearing as a posted transaction almost a week later. If you are using a credit card with a preset spending limit, you should be sure to keep enough available credit on your account to allow the charge to post.

Most problems with the American Express gift card process seem to occur during the interval between an order being "received" and the order being "approved." No one knows exactly what goes on during that interval, but it causes many, many orders to be cancelled and there doesn't appear to be any way to generate consistently successful transactions.

For what it's worth, for a second transaction I made early today, I received the "order approved" e-mail just 3 hours after the "order received" e-mail: as we say in the business, your miles may vary!