This entry was posted on Monday, March 16th, 2009 at 10:36 pm and is filed under Ask the Readers, Endorsement, Food, Household, Planning, Rewards, Risk, Saving and Investing. Both comments and pings are currently closed.
This past Sunday morning ScrapperMom was perusing the grocery store circular when this offer caught her eye (my emphasis added):
Choose your tax refund reward. Customers can purchase gift cards with their Shaw’s Rewards Card (for carded markets) at their local store’s Customer Service center. No tax form or refund check is necessary. Customers may purchase a grocery store gift card at $250 or $300. Each gift card will be loaded with an additional $20 for a $250 purchase or $30 for a $300 purchase. There is no limit for the amount of cards a customer can purchase. The additional bonus amount cannot be used for the purchase of alcohol, fuel, tobacco, lottery tickets, dairy products, prescription drugs or additional gift cards. Offer is available March 13, 2009 through April 15, 2009.
Shaw’s is one of our local grocery stores (same company as Star Market), and it ran a similar 10% bonus during last year’s Economic Stimulus check mailings. Apparently the response from customers and reward for Shaw’s was so great that they’ve decided to run this offer during tax season this year as well. The limit before was whatever the size of your stimulus check was, and we took full advantage. But I’m really psyched that there’s no limit on this offer.
Clearly this is a great deal no matter how you slice it. The offer is for a store that we visit at least once per week, where we spend at least $250 per month, and that sells necessities, namely food. The only real question is how much advantage we can take. There are a few factors that limit how many of these cards we should buy:
- How much cash we have available.
- What the cost is to tie up this cash for whatever time it will take to use up all of the cards that we buy.
- Whether this is really a no limit offer.
Because we don’t live paycheck to paycheck, we actually have somewhere between $10,000 and $15,000 available on hand in cash that we could use for this “investment” that is not technically part of our emergency fund. It turns out that we also gave the government too big of an interest free loan last year, so we’re going to be getting a healthy refund which we can also roll into purchasing discount gift cards.
I ran some quick math to see how soon I would have to spend the gift card before we would have just been better off sticking the money in a CD. I figured out that if I could earn 3.5%, tax free, on a $300 investment today, it would take 34 months to earn 10% on the initial investment. That means that as long as I can spend the gift card within the next 3 years (because with taxes it will take longer than 34 months to accrue 10%) I will be getting a better return by buying the gift card.
I asked myself if there were any down sides to this offer as well. One that pops to mind is that we’ll be tying up lots of cash that we may need for other things. The nice thing about these gift cards, however, is that we can easily trade them for cash, and if things ever get that bad, we’ll still have to eat, so having grocery cards is not such a bad thing. Another thing we’ll need to be careful about is where and how we store the cards. Having the equivalent of thousands of dollars in cash laying around has risks: fire, theft, loss, etc. We’ll have to figure out a way to deal with that. Lastly, what if the store goes out of business? This is certainly something about which to be concerned, but this is a chain that has been around as long as I can remember, stores don’t usually just all of a sudden stop honoring gift cards, and as above we should be able to liquidate them quickly if it comes to that.
We still haven’t decided exactly how many of these cards we’ll buy in total. We spent about $5,400 on groceries in 2008, so we can buy a lot of these cards and still come out ahead. Yesterday ScrapperMom went to the Customer Service desk to buy 6 of them and was told that you can only buy 5 per customer per day. So there is, apparently, a limit, but I still don’t think it should affect how many we want to buy (though if it did I would argue that the ad does say “no limit”).
What do you think? Should we stock up on $10,000 worth of these cards (or the closest multiple of $300) and get an instant $1,000 back? Is this a deal that interests you? How many will you buy or would you buy if you could? Are there downsides or risks that we’ve yet to consider? Leave a comment below!