How to Get an Instant 20% Return on Investment

It's the holidays and you know what that means?

Gift card purchase bonuses!

A gift card purchase bonus is when the store gives you a small gift card in return for you buying a bigger one. Like a $5 gift card for you when you purchase a $25 gift card for a friend.

There's no rule that says you can't buy them for yourself. You spend $25 for a gift card, you get $5 free. That's an immediate 20% risk-free return on investment… can't beat that with a stick.

Companies love gift cards because they get guaranteed money and they get it right now. You, as the proud gift card holder, will spend it sometime in the future. That time in between now and later, the store will turn that into even more money ($146 million more, in Starbucks' case).

There are a handful of stores, usually restaurants, that I know we visit often enough for this to be worth it. We go to Noodles and Company once every 4-6 weeks. The kids enjoy it, we enjoy it, and they serve wine and beer. πŸ™‚

I just got the following email from Noodles & Company:

Instant 20% return!

The only gotcha to watch for are the terms of the bonus. The bonus often has a short time limit and other terms. In the Noodles & Company case, you can only use it in January of next year. Not a big deal for $5 but if you bought a lot of them, you might be hard-pressed to use them in a single month.

Finally, you often need to be subscribed to the store's email list or membership to get an offer. Sometimes they advertise the bonus, sometimes they don't. They always email their lists though.

Are you going to take advantage of these offers? If so, which ones?

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About Jim Wang

Jim Wang is a forty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

>> Read more articles by Jim

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

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About the comments on this site:

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

  1. Abigail @ipickuppennies says

    My husband was on an IHOP kick for awhile. They had a $5 bonus (to be used next time) offer. So we’d buy the GC, use it to pay right then, and use the bonus next time, also buying a GC, etc. Worked out quite well.

    That said, I tend to avoid these offers — as awesome as they are — because of the limited time you can use them. We’re not organized, and iffy health makes things even more hazy.

    But there are a couple of places we go almost weekly for things like date night. So I’m definitely considering investing in a few gift cards there.

    • Jim says

      Yeah, the limitations on the bonus vary from place to place so we only take advantage of the ones where we know we will go in time. I don’t like doing it for places we go less often because then you’re not saving money.

  2. Justin @ Root of Good says

    I’m completely on board with the gift card game. I’ve done a couple of the Papa John’s groupon deals where you buy a $25 GC and get 2 (!!) free large 1 topping pizzas. I applied a $5 coupon to the groupon purchase, got $2 cash back by shopping through ebates, so basically walked out the door with enough e-credit to buy 5+ large pizzas for $18 (and they throw the pepperoncini’s and garlic butter in for free).

    And I routinely buy GCs from online gift card resellers for places like Lowe’s and Home Depot when I have a medium to large project coming up. We saved over 10% on $2500 of new windows last year just for the inconvenience of a few clicks online.

    • Jim says

      There are a few stores where a gift card is like cash – Southwest, Home Depot and Amazon come to mind. I have no idea why anyone would sell a Home Depot gift card, I’d use it up in a second. πŸ™‚

  3. Darla says

    I need to buy (3) $50 Home Depot Gift Cards to give as Christmas gifts. Can you tell me where I can buy these to save money? Thank you!

    • Jim says

      Hrm… as gifts I don’t know, but personally you could go to a to see what the biggest discounts are (right now it says 7% but they’re electronic gift cards).

      Sadly, Home Depot doesn’t offer any promotions when you buy their cards. It’s usually just restaurants.

      • Darla says

        Thank you for your response! It could also be Lowe’s gift cards instead of Home Depot… if that helps! Thanks!

        • Jim says

          I’m afraid not, but if you have a rewards credit card, you can usually find one of those as a reward if you’re willing to trade the points. It won’t be effectively cheaper but it won’t cost you money out of pocket.

          • Norma Walker says

            If you have a Kroger’s they give 2x the fuel points on gift cards lately 4x I buy Lowe, Home Depot and places I go and eat I had over 1,000 points for gas.

  4. Lance Cothern says

    We recently found out Sam’s Club sometimes has deals on gift cards. We like to go to O’Charley’s and they sell 2 $25 gift cards for $39.88. They do the same thing for the local movie theater and since we knew we’d be seeing a couple of movies soon, we bought that, too! Just have to make sure we use them πŸ™‚

    • Jim says

      Yes, Costco does too. Usually $100 in gift cards will run you $80 and it’ll be broken up into $25 cards. I don’t believe Home Depot is available.

  5. Adam @ says

    Costco and Amazon frequently have great gift card deals. It’s also worth getting on your credit cards website and shopping through their portals, which can give you additional discounts or cash back.

  6. Stockbeard says

    Somebody working in the gift card business told me where the real money is: up to 10% of the cards are never used. They’re either forgotten in a drawer, or just lost, etc…

    Easy money for the stores selling those, so they can easily afford a +$5 gift once in a while. As long as you actually use the card wisely, you’re indeed taking advantage of the situation πŸ™‚

    • Jim says

      I’m not surprised that 10% don’t get used, we have a ton of gift cards in a folder that we struggle to use. πŸ™‚


  7. Fred says

    Many credit card companies allow you to buy gift cards with rewards points. Many of the cards are offered at a 5% to 10% discount from what the normal number of points are for the cards. In the past, I’ve even seen American Express offer a 5% discount on American Express gift cards.

    When I accumulate a lot of gift cards, if nothing is written on the cardboard holder, I look to re-gift them. And for Amazon gift cards, I load them into Amazon and use the balance to buy other gifts.

    • Jim says

      Good suggestions! I should have regifted some of them and I imagine, even if something is written on the holder you can probably get a new one from the store if they’re nearby.

  8. Will says

    Hey Jim!
    I saw on my AMEX account that you get a $10 statement credit if you spend $200 on AMEX gift cards. At first I thought it wasn’t worth it, but after reading this article it was rob ably is right as its a 5% return and I will still get the AMEX points for making the $200 transaction too?! You can use Amex gift cards as normal so should just buy one and use it as normal?

    • Jim says

      Hmmm, so typically AMEX gift cards have a purchase fee so look around for a coupon that waives those fees. There might also be a shipping fee. They may negate the benefits of the statement credit and headache of spending those gift cards.

  9. Vic @ Dad Is Cheap says

    I get about $50 worth of gift cards each month using Swagbucks. I earn the $ mostly through streaming videos in the background while I’m going on with my day. I’m also a big fan of the website Raise which sells discounted cards. You can earn a bit extra by shopping on Raise through Swagbucks for the gift card and then going to the actual site through Swagbucks again.

    One thing I do is to treat gift cards exactly the same as cash accounts in YNAB. This helps me trick myself into not thinking having a gift card is an excuse to buy something unnecessary.

    • Jim says

      Great suggestion on where to get gift cards, do the Swagbucks gift cards come as physical cards? Might be a good way to load up on holiday gifts just to play videos in the background.

      • Vic @ Dad Is Cheap says

        I only get Target and Amazon giftcards from Swagbucks and those are both electronic only. It’s great if you can get into the habit of just having videos streaming. What I ended up getting was two cheap $10 android phones from Amazon so I can just use that exclusively to swag.

          • Vic @ Dad Is Cheap says

            I got two LG Exceeds from Amazon for about $10 each. I put them on wifi mode.

            You then download all the Swagbucks apps (SBTV,, Sportly, and Indiemusic) and stream videos all day with those two phones. The main app i use is SBTV in which I favorite one 10 second video and it just replays it all day. The only thing w/ these apps is that they sometimes freeze so you just gotta monitor it once in awhile.

            I score at least 150-250 a day this way. Sometimes more if I’m home all day.

          • Jim says

            Oooooh, I have ipod touches that I think would work for this!

            [aaaaand it turns out my ipod touch is too old for the app hahaha]

          • Vic @ Dad Is Cheap says

            haha. yeah i tried an old iPod touch and it didn’t work either. Damn Apple – always making you upgrade to the latest model by having the older models slow to a crawl on the latest software. If they can upgrade at all. My iPad 2 is slow as heck but I’m holding off until it dies completely.

          • Jim says

            I can’t even upgrade the ipod touch’s iOS, so they’re pretty much useless now!

            Oh well, still good to keep in mind.

  10. Jon says

    You just saved me as much as $75, thank you very much! I just stumbled on your blog for the first time, found this article and got to thinking. I knew discover has a 5% back on up to $1500 of certain online purchases going on through the end of December and it didn’t occur to me that that may work on gift cards as well. Sure enough, that includes gift cards. If that’s not as good as buying cash, I don’t know what is. I’m sure we already spend quite a bit in qualifying online purchases considering the holidays but you better believe I’ll be doing the math and making an order before this promotion runs out to clean up the remainder. Thanks again!

    • Jim says

      In our house gift cards are as good as cash!

      And I’m so glad I was able to help, sometimes as a blogger you write posts and you never know who it might help out or if anyone finds it helpful, so thank YOU for leaving a comment letting me know it helped. It really does mean a lot to me.

  11. Expat Warrior says

    Using a cash back credit card to buy these gift cards equates to an even greater savings.

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