Can the money on a gift card be transferred to a bank?

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You may be wondering, can gift card money be directly transferred to a bank account? The answer is usually no. But you are not the only one troubled by this “dormant” fund.

Data shows that nearly 47% of adults hold at least one unused gift card. In the United States, the total value of these unused gift cards reaches approximately 23 billion dollars, with an average of 244 dollars per person in idle cards.

Fortunately, there are multiple indirect methods to “cash out” these balances. This guide will provide you with clear, actionable solutions to help you effectively handle these cards.

Key Takeaways

• Gift card money typically cannot be transferred directly to a bank account, but indirect methods exist to cash it out.
• Open-loop gift cards (such as Visa, Mastercard) can be linked to digital wallets or withdrawn at ATMs, making them easier to cash out.
• Closed-loop gift cards (such as Amazon, Apple) can be cashed out by selling to recycling platforms or purchasing goods and reselling them.
• Cashing out gift cards involves fees or discounts, and you need to weigh speed against cost.
• During the cash-out process, be sure to choose reputable platforms and stay vigilant against scams to ensure fund security.

Which Gift Cards Can Be Cashed Out?

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To successfully convert gift card balances to cash, you first need to identify the type of card you hold. Different types of cards vary significantly in the difficulty and methods of cashing out.

Open-Loop Gift Cards

Open-loop gift cards are the closest to cash. They usually bear payment network logos such as Visa or Mastercard. You can use them at any merchant that accepts the payment network, not limited to a specific brand.

The flexibility of such cards is their greatest advantage. You can handle their balances in the following ways:

• Link to digital wallets: Add the card information to accounts like PayPal or Venmo, then use it for spending or transfers.
• ATM withdrawals: Some prepaid cards with PIN codes support direct cash withdrawals at ATMs, but most gift cards do not have this feature.

Important Note: According to the Credit Card Accountability Responsibility and Disclosure Act (CARD Act), gift card funds are valid for at least five years from the date of purchase. This means you have plenty of time to handle the balance without worrying about quick expiration.

Closed-Loop Gift Cards

Closed-loop gift cards can only be used at designated merchants or brands, such as Amazon, Apple, or Starbucks gift cards. This type of card is currently the most common, but cashing out is also more difficult.

The official policies of Amazon and Apple clearly state that once gift card balances are redeemed to an account, they cannot be withdrawn, transferred to others, or refunded. This means you cannot directly transfer this money to a bank.

However, if you are in certain states in the United States, the law provides a path for small-amount cash-outs. When the balance in the card is below a specific amount, you can request the merchant to refund cash directly.

Understanding the type of card in your hand is the first step in choosing the best cash-out method.

How to Handle Gift Card Money?

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Now that you understand the type of card you have, the next step is to choose the cash-out method that best suits you. Although directly transferring gift card money to a bank is almost impossible, the following four mainstream indirect methods provide effective ways to convert balances into usable cash.

Sell Through Recycling Platforms

This is the most direct and common method for handling idle gift cards. You can sell the unused gift card information to specialized recycling websites, which will purchase it at a price slightly below the face value and then pay you in cash.

The advantage of this method is simplicity and speed, but the disadvantage is that you will lose part of the value, known as the “discount rate.” Depending on the platform and the popularity of the card, you can recover up to 92% of the face value in cash. For example, on a platform like GiftCash, a $400 Target gift card might bring you $332 in cash. On C2C platforms like eBay, buyers are usually willing to pay 80% to 90% of the face value.

Core Trade-off: You need to exchange part of the card’s value (discount rate) for the convenience and speed of the operation. Cards from popular brands, such as Walmart or Target, usually sell for better prices.

To give you a more intuitive understanding of the resale value of different cards, here is some reference data:

When choosing a platform, be sure to prioritize websites with good reputation and high user reviews to avoid fraud risks.

Link to Digital Wallet for Transfer

If your gift card is an open-loop prepaid card such as Visa or Mastercard, linking it to a digital wallet (such as PayPal or Venmo) is another excellent choice. This method allows you to transfer the gift card money out with almost no loss.

The basic process is: you add the gift card as a debit or credit card to your PayPal account, then use inter-account transfers or direct spending to use up the balance, and finally withdraw the PayPal balance to your bank account.

Step-by-Step: How to Add a Gift Card to PayPal

1. Log in to your PayPal account and go to the “Wallet” page.
2. Click “Link a debit or credit card.”
3. Choose “Link a card manually.”
4. Accurately enter your gift card number, expiration date, and CVV security code.
5. Click “Link Card” to complete the operation.

Important Note: Before linking, be sure to check and confirm the balance in the card via the phone number or website on the back of the card. PayPal sometimes performs a small pre-authorization to verify the card. If linking fails, try adding it again in the account’s “Top Up” function.

After successfully linking, you can transfer this money to another account of your own or to trusted family and friends, then withdraw to the bank. When withdrawing, you can choose free standard transfer or paid instant transfer based on your needs.

Use Payment Tools to Collect Payments

This is a more “hardcore” method, suitable for users with small businesses or those who don’t mind registering a business account. You can use mobile payment tools like Square, treat yourself as a merchant, and then “pay” yourself with the gift card.

The operation process is as follows:

1. Register a business payment account (such as Square or PayPal Zettle).
2. Use its accompanying card reader or App.
3. Enter the amount you want to withdraw from the gift card, then swipe the card or manually enter the card information to complete the payment.
4. This money, after deducting transaction fees, will enter your business account.
5. Finally, transfer the funds from the business account to your personal bank account.

The main obstacle of this method is the initial setup. You need to provide business information, bank account, and even sole proprietor identity proof (such as EIN). In addition, each transaction will incur a fee.

Although the operation is slightly complex and costly, it provides a reliable path for handling open-loop gift cards.

Shop and Resell or Act as a Proxy Buyer

For closed-loop gift cards that can only be used at specific merchants (such as Amazon, Apple), converting the balance into physical goods and then selling them is a common strategy for cashing out. This method tests your market insight.

You need to use the gift card to purchase “hard currency” items with high demand and good value retention, then sell them on second-hand platforms (such as eBay, Facebook Marketplace) to get cash.

Which goods are suitable for resale?

• Electronics: Latest Apple products, game consoles, high-end headphones, etc.
• Collectibles: Limited edition sneakers, vintage jerseys, popular figures, etc.
• Daily necessities: Branded cosmetics, household items with low discounts, etc.

The profit margin of this method depends on your product selection ability and the fees of the chosen sales platform. The fee structures of different platforms vary greatly.

Although this method requires more time and effort for market research, listing, communication, and shipping, if operated properly, it may be the best way to maximize the value of closed-loop gift cards.

Costs and Risks of Cash-Out Operations

Although converting gift card balances to cash is feasible, the process is not without cost. Before taking action, understanding the related costs and potential risks is crucial, which will help you make the wisest decision.

Fees and Discount Rates

There is no free lunch, and converting gift card money to cash is no exception. Almost all methods come with direct or indirect fees.

The main cost is the “discount rate.” When you sell a gift card through a recycling platform, you cannot get its full face value.

On mainstream gift card resale websites, you can usually only recover 70% to 80% of the face value. This means you will lose 20% to 30% of the value in exchange for cash.

In addition, if you use payment tools or digital wallets for transfers, the platform will also charge fees. For example, for instant transfers via PayPal or Venmo, you need to pay 1.75% fee (minimum $0.25, maximum $25).

Time Cost Analysis

In addition to monetary costs, you also need to consider time costs. The speed of funds arrival varies greatly among different cash-out methods.

• Link to digital wallet: This is one of the fastest methods. Through instant transfer, funds usually arrive in your bank account within minutes.
• Sell on recycling platforms: Speed depends on the platform. Some platforms process quickly, but others take longer.

If you need money urgently, choosing a method with instant arrival may be more suitable, but you may need to pay higher fees for it.

Common Scams and Avoidance

During the cash-out process, protecting your property security is the top priority. Scammers often set traps by exploiting people’s urgency to cash out.

The Federal Trade Commission (FTC) reminds you to be vigilant against the following common scams:

• Impersonating official agencies: Scammers pretend to be the IRS or technical support (such as Apple, Microsoft), requiring you to pay “taxes” or “service fees” with gift cards.
• Fake prize notifications: Inform you that you have won a big prize, but you need to pay a handling fee with a gift card first.
• Online transaction traps: On second-hand platforms, encounter buyers who insist on using gift cards as payment.

How to operate safely?

1. Verify platform reputation: Before selling the card, be sure to check the user reviews and ratings of the recycling website. A reputable platform will have clear contact information and dispute resolution policies.
2. Be wary of unreasonable requests: Any platform that requires you to provide too much personal information or to advance funds may be a scam.
3. Check the card itself: When purchasing or receiving a gift card, check if the packaging is intact and if the PIN code is covered.

Remember, if an offer sounds too good to be true, it probably is a trap.

Although gift card money cannot be directly transferred to a bank, selling through third-party platforms or linking to digital wallets are currently the most mainstream cash-out methods. Before taking action, you should carefully compare the discount rates, arrival times, and platform reputations of different methods, and choose the path that best suits you.

Safety is always the top priority

• Monitor your card balance and detect anomalies in time.
• Remember a danger signal: No legitimate institution will require you to pay with gift cards.

Make the wisest choice based on the type of card you hold and your urgency for cash.

FAQ

Which gift cards have the highest recycling prices?

Open-loop cards (such as Visa, Mastercard) and cards from popular retailers have the highest prices. Because they are in high demand and widely usable. For example:

• Large supermarket cards such as Walmart or Target
• Tech brand cards such as Apple or Amazon

What if I am not in those states that allow small-amount cash redemption?

You will not be able to request the merchant to refund cash directly. You need to choose other methods introduced in this article. For example, sell the gift card to a recycling platform, or use it to purchase popular goods and resell them.

What is the safest cash-out method?

It depends on your card type. For open-loop cards, the safest method is to link it to your own trusted digital wallet such as PayPal. For closed-loop cards, the key is to choose a recycling platform with good reviews and reputation.

Safety Tip: Before confirming receipt of payment, never disclose the card’s PIN code to any individual buyer.

Can I sell a gift card that has already been partially used?

Of course you can. Most recycling platforms accept gift cards with remaining balances. You only need to accurately enter the exact current balance of the card when selling. The platform will calculate and pay you the corresponding cash based on the remaining value.