Are Costco's Discounted Gift Cards Worth It?
Costco gift cards are generally a good deal. But be careful if you're buying those gift cards for yourself.
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Joining Costco can be a smart personal finance decision. Costco's everyday low prices make it easy to save money on things like groceries, cleaning supplies, paper products, and other such things you use on a regular basis.
But the benefits of a Costco membership extend well beyond savings on groceries and similar essentials. You can turn to Costco for everything from apparel to electronics to gifts. And when you're in a situation where you're not sure exactly what gift your recipient wants, a gift card can be a solid bet.
Not only does Costco sell gift cards, but you'll generally be able to buy gift cards at a price that's below their face value. As an example, right now, Costco is selling a four-pack of $25 Papa Johns gift cards online. Normally, that would cost you $100. But you can buy it for $79.99, saving yourself $20. As such, if you want to get your children's teachers a gift at the end of the school year, this would be a good purchase.
But if you're buying gift cards for yourself through Costco, you'll want to make sure you're really going to use them. Otherwise, you could end up throwing your money away.
Put some thought into your purchases
The factor that makes buying gift cards at Costco so appealing is the built-in discount. But before you rush to load up on different gift cards, make sure you actually have a use for them.
For example, you can buy a five-pack of $15 Subway gift cards at Costco for $60. So you're basically getting one of those gift cards for free.
But what if the closest Subway location to where you live and work is 20 minutes away? Chances are, you're not going to go there very often due to the longer drive. So while buying that five-pack might seem like a great deal, it could end up being a waste of your money if you never manage to use your cards.
Similarly, you can buy $100 worth of gift cards to Dave & Busters for $79.99, saving $20. But if there's no Dave & Busters anywhere close to where you live, that may be a silly purchase. After all, are you really going to drive 90 minutes so your kids can run around at an arcade?
Don't throw your money away
CBS News reports that tens of billions of dollars' worth of gift cards wind up forgotten or otherwise unused. You don't want to end up losing money due to being tempted by a great deal at Costco. So before you buy a gift card for yourself, make sure you're likely to put it to good use.
Also, read the terms of your gift cards carefully before making a purchase. Some gift cards have expiration dates. Others might impose an inactivity fee if you let them sit for too long.
Remember, too, that a gift card's value hinges on your ability to be able to use it. So if a company goes out of business, its gift card may end up being worth nothing.
Granted, this may not be such a big issue if you're buying a gift card to a national chain like Subway, with over 20,000 U.S. locations. But once you bring gift cards home, keep them in a place you won't forget about them, and pay attention to the status of the retailers behind them.
There was a time when Bed Bath & Beyond was a thriving retailer. But when it shuttered recently, gift card holders to the store were no doubt forced to run to use up their balances or otherwise forfeit them. Keep tabs on the gift cards you have, in case something similar happens in the context of the businesses associated with those cards.
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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.
