Thursday, 11 July 2024

3 Reasons Not to Buy Gift Cards at Costco

by BD Banks

3 Reasons Not to Buy Gift Cards at Costco

Image source: The Motley Fool

Buying gift cards at Costco can save you 10% to 30% off the card’s face value. For example, buying two $50 Uber gift cards for $79.99 would save you $20 instantly. That is, so long as you actually use the Uber gift cards.

This last point is crucial. Around 47% of U.S. adults have at least one unused gift card, according to a survey by Bankrate, with an average unused value of $187 per person and value nationwide totaling $23 billion. To put that in perspective, our unused gift card value is larger than the economies of more than 70 countries.

Buying gift cards at Costco only to let them sit in the bottom drawer means inflation would eat away at what you saved on the face value price. Still, even if you’re not the kind of person who would let a gift card go to waste, the warehouse isn’t always the best place to buy them. Here’s why.

1. Selection is limited

Costco doesn’t sell gift cards to every brand or retailer. In fact, its selection is a little lacking. Online, you can find gift cards to popular restaurant chains, entertainment venues, gaming consoles, delivery services, and some travel. At your warehouse, you’ll likely find gift cards to local restaurants or chain retailers.

Don’t get me wrong — every now and then, Costco drops a pretty incredible gift card deal, like its Southwest Airlines gift cards. But if you, like me, don’t eat at popular chain restaurants, don’t play video games, and can’t remember the last time you stepped in a Chuck E. Cheese, Costco’s selection will likely disappoint.

2. Some gift cards come with restrictions

The best gift card options at Costco will likely have limitations on how they can be used, how they are delivered, and how many you can buy per membership.

Nearly all of Costco’s online gift cards are delivered electronically to your email address. You can then use the gift card in person if it can be scanned at checkout, order something online, or upload the card’s value into an app.

For example, Costco’s Cinemark e-gift card ($39.99 for $50 of value) can be added to your Cinemark account online or in its mobile app, which you can then use at participating Cinemark locations. Gift cards purchased in a warehouse may be physical cards that you can use at participating locations.

A digital card could be a problem if you’re trying to give it as a gift. It’s one thing to put a physical card in a birthday or graduation card; quite another to send the gift card to someone’s email. And if that person isn’t digitally savvy — say your father who still sends you pictures of “interesting” articles he’s reading from his desktop instead of just sending you the link — you might be gifting someone a problem (and contributing to the nationwide unused gift card balance).

Even if your receiver is digitally savvy, Costco gift cards have other restrictions that could make them frustrating to buy. Many of the best restrict how many you can buy per membership. For instance, you can only buy two $100 Instacart gift cards.

Others will have restrictions around how many transactions you can make. This caused a lot of confusion with Costco’s Uber gift cards, which are limited to two per membership but only one transaction total. In other words, you can buy two Uber gift cards in one purchase, but if you buy only one today, you won’t be able to buy another one, say, next week.

3. You might not find the right face value

Costco doesn’t let you set a gift card’s value. Instead, it sells them in denominations. So you can use your credit card to buy five $15 Subway gift cards for a total value of $75. But you can’t buy three $25 Subway gift cards, nor can you buy one $75 Subway gift card.

This could make it frustrating if you’re trying to buy bulk gift cards as gifts for different people, such as your kid’s teachers. If you want to give three teachers a $25 gift card, but Costco only sells that particular gift card in packs of five cards worth $15, you might be out of luck.

To be sure, these gift cards can help the right person save money at Costco. If you’re already shopping with a particular retailer and can get a discounted gift card from Costco, buying that in advance could leave extra money in your budget. Just be sure you understand the card’s limitations (if any) and avoid buying cards you’re not going to use in the near future.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends Costco Wholesale, JPMorgan Chase, and Uber Technologies. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

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