I'm an Amazon prime member, and I have their 5% back credit card. I'm also recently engaged, and after two wedding showers we have a $1000 Amazon gift card balance. I'm making some ~$300 purchases in the near future. I recognize the benefit is negligible, but theoretically, is it better to make this purchase with the credit card and "earn" $15 cash back, or make this purchase with the gift card balance (considering inflation and other factors)? I generally spend around $1000 on Amazon a year, and I always pay my credit card balance in full.
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The 5% back card isn't a Gift Card... it's a Credit Card. Unless you have the money to pay off your $300 purchase immediately, you'll likely eat through the $15 cashback in interest.– SnakeDocCommented Oct 29, 2017 at 23:38
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Ah, sorry, edited.– PeteCommented Oct 31, 2017 at 6:49
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1 Answer
Use up the gift card balance.
One way of thinking about it is that with inflation, future purchases will be more expensive than current purchases. So you'll get more cash back from future purchases than current purchases. Not sure how much that matters, since it's the same $1000 balance either way. But this is the only way that I see to apply inflation to the problem.
Another way to look at it is that at this point, your $1000 balance costs you $0 to use. Your $300 purchase would cost you $300 to buy and return $15 to spend in the future or $285 net. Spend the free money first.
The 5% cash back comes in the form of gift card balance. If you always delay using the gift card balance, it is worth nothing to you.
You can't leave your gift card balance to someone else. If you were to die tomorrow, the gift card balance would disappear. Your estate would have to pay off your credit card bill regardless.
Finally, however unlikely it seems now, Amazon could go out of business. Then you'd negotiate with the bankruptcy trustee to get compensation. A judge might not give you 100% of your balance.
Use up the gift card balance. The 5% cash back will still be there tomorrow. If you were canceling the card or your Prime membership, it would be a different story. Then it might make sense to build your balance before termination. But if you plan to keep both card and Prime membership, then just use up the gift card balance while you are sure that you can.
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2"You can't leave your gift card balance to someone else." I find this disturbing. I know there are issues with all my digital assets, digital books, movies, music, etc, that might not be transferred. But a cash balance on a card? Lost to the company when user dies? Commented Oct 29, 2017 at 10:38
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Are Amazon gift cards even tied to a single person? (I received one for Christmas, and vaguely remember a process of "adding" it to my account, but I didn't recall it being tied to me before that.)– chepnerCommented Oct 29, 2017 at 15:19
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The gift card may not be, but the gift card balance certainly is. That only makes sense as the balance on the Amazon account. The balance may not even have ever been associated with a gift card. For example, the Amazon rewards card pays its 5% "cash back" as gift card balance.– BrythanCommented Oct 29, 2017 at 15:35
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@JoeTaxpayer I can't seem to find a page for Amazon, but a lot of online services have processes for loved ones (and also presumably estate executors) to access the deceased's account. The balance would probably still be stuck in that account though, I don't know if they have a process for transferring it somewhere else. Commented Oct 29, 2017 at 16:45
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2FYI: According to this UK Amazon page gift-cards (and unused balances thereof) expire after 10 years; cannot be used on any other Amazon site; cannot purchase new gift-cards; cannot be reloaded, resold, transferred for value or redeemed for cash. Unused balances cannot by transferred from one Amazon account to another. Can't find any reference to what happens if an account-holder dies. Commented Oct 31, 2017 at 9:24