Remember how I get an effective reward rate of over 3% from my credit card? Well I take those gift cards and turn them into cash, giving me more cash than the 2% cards that top the cash back charts.

Here’s how I do it.

I use a great little service called Plastic Jungle. It’s a website that buys your unwanted gift cards and resells them to people who do want them. It’s arbitrage at it’s finest. It’s not like eBay where you are responsible for the transaction. Plastic Jungle gives you money and you’re done. No waiting, no annoying buyers, no hassle.

How I’ve used it

I wait to collect 10,000 points before redeeming. All the good redemption rates are offered at this point level for my card. After I have enough, I find a popular $100 gift card that is accepted at Plastic Jungle. Some good gift card choices are ones like Staples and Walmart because they are usually in high demand.

When the gift card arrives in the mail, I go to Plastic Jungle. I type in the card’s information, see how much they are paying, and mail it in. A few days later, the money is sitting in my PayPal account.

What’s the catch?

When I sell them my $100 gift card, they pay me less than $100. They give me less than face value so that they can turn around and sell it to some buyer for more than what they gave you. They are a business and they need to take money somewhere.

That’s why it’s important to pick cards that are in high demand. Before redeeming my points, I like to check Plastic Jungle to see what the gift card will get me.

I’ve received rates around 90-94% of the face value (so $90-94). Not bad if you ask me.

I just checked their rate for Walmart gift cards and they are paying up a hefty 96.6% as of 7/22/12. Always check though. Staples is getting only 78.75% as of 7/22/12 even though they were paying up to 92% several months ago. Prices fluctuate with supply and demand, as one would expect. I guess there are a lot of Staples gift cards in demand or no one wants them like they did when I sold my card way back when.

If you’re lucky, some cards you don’t even have to mail in to sell. Depending on the store, Plastic Jungle is able to verify some cards online. This means faster turnaround and fewer steps.

How you can use Plastic Jungle

Selling your card to Plastic Jungle is a quick and easy way of turning your gift card into cash at a small cost. Of course if you find certain gift cards very useful don’t bother selling them. I realized that I do a decent amount of shopping at Bloomingdale’s so I don’t go through this route as often anymore.

Lastly, you can use the service even if you don’t use it the way I do. I’ve recommended the site to many friends who were having difficulty selling their unwanted cards to friends. They received money quickly without the hassle of finding a buyer.

I’m surprised how many people don’t know about the service. Take a look, I’ve already had success with it several times. Not only is it great for selling gift cards, but it’s also a great place to pick up gift cards on the cheap – well, on the cheaper.

Who’s going on a selling spree and unloading their collection of unused gift cards?