Road Bump in the New Business: PayPal Limits eBay Gift Card Usage

As I explained in my last post, My Latest Get Rich Slow Scheme: Gift Card Arbitrage, I recently started buying and selling gift cards to make a little money and generate credit card miles and points.  One of the places I buy gift cards is eBay and by using eBay gift cards to buy retail (non-eBay) gift cards, I am able to extend my profit by a couple extra percent.  Yesterday, all of my eBay gift cards stopped working and a call to eBay’s customer service was no help in explaining why.  I investigated further and am going to explain why my gift cards stopped working all of the sudden, why I use so many eBay gift cards in the first place, and what my plans are moving forward.

Why Did All My eBay Gift Cards Stop Working?

I found a profitable gift card on eBay yesterday, but when I input my eBay gift card number to check out, it only sort of worked.  eBay recognized that there was still value left on the card and properly zeroed out the total cost, BUT PayPal showed an error message of “This coupon or code ([####]-x) is invalid. You’re not able to use it with this payment.”  (I hid the first 4 of my gift card number, but otherwise left the message untouched).  I thought maybe I had used a gift card that was empty, so I tried a different one but got the same message.  I then called eBay’s gift card number to verify the balance on the card and was informed that I had more than enough to cover the purchase I was trying to make.

PayPal error message I got when trying to use an eBay gift card.


My first thought was that eBay may have stopped allowing the use of eBay gift cards on items in their “Gift Cards” category.  The thought has crossed my mind before, but since eBay is just the facilitator for the sales and not the one selling the gift cards, I don’t see how that could in any way help their bottom line.  A person like myself spending $100 on video games or $100 on gift cards, both sold by a third party, doesn’t make any difference to eBay, they make their cut regardless.  I then decided to call eBay customer service and find out why I was unable to use my gift card.  They attempted to checkout in the same way I did and input my gift card number, but couldn’t see anything wrong on their side.  As PayPal is a treated as separate business from eBay and there were no problems on eBay’s side, they transferred me over to PayPal to investigate.  In retrospect, I probably should have called PayPal directly because the error message was appearing in their portion of the checkout page.

After explaining my problem to PayPal and being on hold for around 10 minutes, my customer service rep finally came back on the line.  He stated that I had reached the maximum for eBay gift card usage on my account and would be unable to use any more eBay gift cards at this time.  This came as a shock because up until this point I was unaware there even was a limit.  After prodding further, he explained that eBay gift card usage on a PayPal account is limited to $5,000 worth on a 180-day rolling period.  As I had met that number in just over 2 months, it looks like I’ll be waiting a short while before I can start using eBay gift cards again.

I did a little research afterwards and did find related information in their gift card terms and conditions that I don’t think I’ve read through before (or at least didn’t worry about a $5,000 limit at the time).  The terms actually say “…verified PayPal accounts are limited to $5000 in purchases of Gift Cards in any 180-day period” (emphasis mine), but it appears that actually means $5000 in usage of gift cards, not just purchases of gift cards.  Unfortunately, I recently bought several eBay gift cards, so I guess I’ll just have to sit on them until my account is able to use them again.  At least my biggest fears of eBay changing item restrictions or my account being restricted for some reason weren’t the cause of the problem.

[UPDATE: How to Check Your ebay Gift Card Usage]

Why Use So Many eBay Gift Cards?

What I’ve learned about buying and selling gift cards in the past few months is that every percent counts.  A 2% difference in the buy price or sell price will make a big impact in how profitable a gift card flip is, especially at the small profit margin I operate at.  One way to boost that profit is by using eBay gift cards to effectively decrease the price that I am buying cards for.  If I can get the eBay gift cards at a discount that exceeds the discount I would get by directly paying with a credit card, it makes sense to buy and pay with eBay gift cards.  For example, I purchased a couple eBay gift cards from a grocery store last quarter when the Chase Freedom had 5% back at grocery stores.  By using those eBay gift cards instead of a standard 2% back credit card when checking out, I effectively reduce the price of my purchase by 3%.  That 3% makes a big difference to my bottom line.

Some of the physical ebay gift cards that I’ve redeemed. Some obtained from Amex Offers, from eBay directly, or bought at a grocery store with a 5x rewards credit card.


Now What?

Luckily, this will only slow down my business for now and definitely won’t stop it.  While I am losing those extra few percent, there are still profitable cards out there to find and purchase.  Plus, in a few short months I’ll be able to start using eBay gift cards again, but now I will be much smarter about it.  When I didn’t know there was a limit on using them, I was fine adding even a single percent at times by going through eBay gift cards.  Now that I know otherwise, I will limit obtaining eBay gift cards to when I can get 3% or more benefit from them.  One example is buying them from GiftCardMall and/or PayPal Digital Gifts who seem to have semi-frequent 5% discounts on eBay gift cards (although they usually limit the number you can buy to one or two).

I recently learned that individuals are allowed to have 2 PayPal accounts if one is a business account, so opening another one to double my gift card limit every 180 days is probably in my near future.  An alternative is opening a PayPal account in my fiance’s name, which I’ve considered before as a way to help meet minimum spends on her credit cards more easily, but that gets complicated fairly quickly if I ever need to contact customer service.  For now I’m not planning on going this route, but maybe at some point in the future I’ll “hire” her into the business as a “gift card purchaser” if she signs off on the idea.


Finally, I’m just excited that the business is doing well so far and I’ve actually been able to turn a small profit while I ramp up volume and figure out the best way to run it.  I plan to file paperwork for a single-member LLC soon and make the business a little more official.  With a little luck, I’ll even be able to get a business credit card or two and significantly increase the number of cards I’m eligible to sign up for.  This eBay gift card limit has been a small road bump, but for every obstacle that sets me back a couple percent, I seem to find new opportunity that opens more doors.  I’ll be sure to keep you updated and only time will tell on what this turns into.

42 thoughts to “Road Bump in the New Business: PayPal Limits eBay Gift Card Usage”

  1. Just ran into your blog from ChasingthePoints. I love MS related blogs. Good stuff here and I was wondering why I couldn’t buy any more GC’s too. It was annoying the hell out of me (especially since i had answered their security questions).


  2. …verified PayPal accounts are limited to $5000 in purchases of Gift Cards in any 180-day period” (emphasis mine), but it appears that actually means $5000 in usage of gift cards, not just purchases of gift cards

    Man that is sneaky. Not how I read it either. I take it you’ve tried to purchase other items besides gift cards once you hit the limit?

    1. Do you mean try to purchase non-giftcard items with an ebay gift card? I have tried that and it appears it doesn’t actually matter what you are spending the gift cards on, but any usage of ebay gift cards with a particular PayPal account is limited to $5,000 per rolling 180 days.

  3. I’ve been bumping into this as well for a while (built a stockpile I am waiting to liquidate:-)

    Does anyone know of a way to track/view the “usage balance” over time and track the current using balance on the 180 day timeline?

    I’d like to know in real time and future when (and how much) I can use the eBay gift cards again … but not sure if there is any way to check or see … ???

    1. If you call Customer Service they may be able to help, but I don’t know of any easy way to check your usage. When I called to figure out why my gift cards stopped working (because of the limit), they said I can start using them again in August, so they at least have some visibility into it.

      1. How do they determine its not until August. Is it a preset period of time based on what month it is or do they look at a snapshot of the previous 180 days at any given point to see when you’ll go below the $5k threshold?

        Also, did you make a PayPal business account? I hit the wall myself and now I’m not sure how to proceed. Pretty irked by the fact that I thought the $5k limit was for PURCHASES and not including redemption.

        1. August is when I’ll drop below $5,000 used in the previous 180 days.

          I did make a PayPal business account, but I haven’t finished the set up yet so I’ve yet to buy anything with it. The process to set up was straightforward, but I do have an actual business.

    2. I think I figured out how to see our giftcard usage!

      -Login to paypal, then click on ACTIVITY
      -On very bottom of the page, click on CLASSIC SITE
      -At the top set the date range so it’s the last 180 days, then click SHOW
      -On the top right of the table, you can choose to download this data in different formats
      (I choose TAB DELIMITED – ALL ACTIVITY) They will then email you a link to the file, so download it
      -The file I choose resulted in a full report in .txt format

      -Now open the file in Excel (I’m using Office 2003, but I’m sure the following steps are similar in other speadsheet apps)
      -In Excel choose DATA – FILTER – AUTOFILTER
      (Now there are drop-down boxes for each column’s category name)
      -Click on the box for the category TYPE, then choose “Gift Certificates and Cards Redemption”
      (now I believe it only shows gift cards redeemed)
      -Now just add up the GROSS or NET column for your total!
      (I just clicked the first empty cell below the NET number and clicked the Autosum button)

      Good Luck!

      1. Just tried this and it worked great! Thanks for the tip. I might make a whole post about this if you don’t mind, I’m sure a lot of others would find the info useful as well.

        1. Sure thing. The more people this helps, the better! I hated not knowing how long I had to wait to buy/use my next giftcard

  4. Does rolling time frame mean that the amount gets released as 6 months pass your first purchase? Or does the 6 months start from the day you hit the $5,000 gift card use?

    1. The rolling time frame means they add up the amount you’ve used in the last 180 days to determine if you’re allowed to use more. Once it’s been over 180 days since you used a card, it will no longer count against your total.

  5. Noah, will you update me when, and if you are able to start using eBay gift cards again in August? I heard from some people that once they stop it, they won’t allow usage again.


  6. Love your blog. Couple questions that you may or may not have answers to.

    Do gyft eBay gift codes count? Do eBay bucks count? Or is it strictly eBay brand gift cards?

    1. Any ebay card/code will count against the limit (regardless of where you obtained them). Ebay Bucks do not count against the limit.

  7. Noah, I’m having this problem now too. I know this is an old post, but I’d be really curious to learn if your business account or wive’s account has worked, or if you’ve otherwise discovered ways around the limit.


    1. Setting up a business account has worked a charm for me, but it won’t be long before I’ve maxed cards on that one too!

  8. I’ve reached the $5,000 limit on both my personal and business account ($10,000 total). After the 180 rolling days, can I downgrade to a personal account, hit the $5,000 limit, open the business account again, and hit the $5,000 limit AGAIN? I’m a little confused!

    Also, since I know you can’t have two paypal accounts with the same credit card, can you just close your account after hitting the $5,000 limit and open a new Paypal account instead of waiting 180 days? Has anyone tried this? Did it work?

    Thanks to anyone who can help!

    1. Sounds like you’re really maximizing ebay gift cards!

      I don’t know if anyone has tried downgrading/closing PayPal accounts to get around the limits, but one thing to keep in mind is that the $5k limit only applies to verified accounts and non-verified accounts get a much smaller $500 limit. I’m not sure how easy it will be to verify new PayPal accounts with any consistency and some horror stories I’ve heard about PayPal/ebay account closures make me nervous to even try.

      I don’t recommend trying to circumvent the limits beyond the the two accounts they allow which you’ve already done, but let me how it goes if you try!

      1. That is true! I know Paypal is strict and will limit/close your account under “suspicious” action. I’d rather wait another month (my rolling 180-days starts February the 3rd) than have my account closed! Thanks for the information, Noah!

    1. Be careful of getting all of your PayPal accounts shut down by doing this, they’ve been known to be a pain to work with if that ever happens.

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  10. I have searched and can’t find an Answer to my question. I am going to be purchasing an ebay item for $1200, I keep reading that there is a $500 limit per transaction but you can use multiple gift cards in a single transaction. My question is can I buy 2 $500 gift cards and a $200 gift card to pay for a single transaction? My paypal accout is verified. The reason I would like to do this is, my local grocery store is offering 5x the gas points if I but these cards and I will receive 3% cash back for using my credit card . Thanks!!

    1. Hey Adriene,

      The ebay terms are pretty clear about there being a limit of $500 in total across gift cards for any purchase:
      “No more than a total of $500 in Gift Cards may be redeemed per eBay purchase.”

      Having said that, I did use more than $500 on a single transaction in the past ($750 is the highest I’ve gone) without issue, but the rule may be specific per item. Ebay and PayPal are frequently updating their software, so it’s impossible to know for sure whether or not they will allow >$500 on a purchase of $1200 without simply trying it out.

      If you buy the $1200 and it doesn’t let you use them how you like, it’s always possible to liquidate the remaining $700 over time with gift card arbitrage, but you may not want to go through that hassle.

  11. Thanks Noah!! The purchase is for a timeshare at disney world. I will be purchasing park tickets and gift cards on ebay with in the next month so I’ll give it a try and see how it goes. Wort case scenario I will use the card on those items. I just can’t pass up the free tank of gas and 3% back. If anyone here has a stop & shop in their area, the 5x gas points starts tomorrow 1/15

  12. I just wanted to give an update, I was able to pay the entire $1200 in the same transaction

    Received 6000 gas points from stop & shop. Aprox $100 savings on gas
    Will receive $36 from amex. 3%.
    Received $24 in ebay bucks
    Will receive $15.00 from topcash back portal. (1.25%)

    1. Thanks for the follow-up. Looks like they aren’t enforcing the $500 gift cards/transaction rule at the moment and you definitely took advantage of it! Nice job combining deals

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  14. Hi Noah — Very much enjoying the MS discussions with eBay GCs.
    I’ve been using the eBay GC thing to purchase high value gold coins when I can find them with eBayBucks offered.. not too easy anymore. But the hunt is worth it especially when the 4X and 5x eBayBucks offers show up.

    My question:
    I used eBay GCs to purchase an item on eBay through PayPal. It turned out to be a scam and after the dispute/claim process I’m sure I will be refunded (eBay and PayPal have been excellent at this for me over the years). I have asked PayPal CS how exactly the eBayGCs get refunded, and, does that eBayGC total come back off my $5000/180 day limit.
    Do you or anyone know these answers?
    I didn’t think this damnable (and possibly illegal) $5000 limit would ever be a concern for me… but I’m there now.
    Thanks for any advice.

    1. Hey Tom,
      The golds coins are an interesting strategy if you plan to invest in them or have a quick way to flip them back into cash at a competitive rate.

      From my experience, buying with gift cards that are later refunded can go one of two ways depending on the timing. If it happens right away, the money should be put back on the gift card and no longer count against your $5,000 limit. If it’s been a while since the purchase (I don’t have a good handle on where the cutoff here is), it’s possible the money will be refunded directly to your PayPal account. At this point it does count against your $5,000 limit, BUT you essentially just cashed out the ebay gift card so it’s not really a loss.

      Note: I definitely don’t recommend trying to abuse this in any way, PayPal will probably shut you down. It’s fine if all the refunds were legitimate and handled in a timely manner though.

      1. Thanks Noah. Yep, my refunds are definitely legit. I’d much rather have the coin than the refund. I must say that I do tend to take greater chances on some listings that have more red flags due to the fact that both PayPal and eBay have ALWAYS had my back and made me whole in these scam situations, I suppose there could be a first time, but until then I will have nothing but praise for their Buyer Protection Program.

        The gold coins have worked well for me because they usually have rather narrow buy/sell spreads, and using cards with accumulated discounts of 15 – 18% can be huge. I don’t however resell the coins on eBay – usually directly to a couple of large dealers.

  15. Hi Noah,

    I came across your blog about ebay gift cards after running into a bit of trouble with their gift card rules. I was recently trying to buy a sewing machine, so I was buying ebay gift cards to pay for it. The right machine for the right price popped up the other day, and when I tried to check out, I discovered the (in my case) $1000 limit. The sewing machine is $4000. So, I don’t think I’ve gotten over the the shock of having thousands of dollars in ebay gift cards that I can’t use. Extremely frustrating! A tip you may already know about – If you use to buy ebay gift cards, you get 2% back in Swagbucks, which you can use to redeem for free gift cards. (Free = amazing profit for you!)

    1. Yeah, there are a lot of limits to gift cards including per transaction.

      There are a lot better ways to buy ebay gift cards than Swagbucks, but that’s definitely better than nothing. Office stores, buying when they’re at a discount (+ shopping portal), or even grocery bonuses because most sell ebay gift cards.

  16. So I’ve run into a problem. When I went to pay for something on ebay a few weeks ago the final payment page where I usually change the payment method to my credit card or pay with a gift card never showed up and it somehow just paid out of my checking account. I was so pissed ( it was a $400 order) anyways.. I removed my bank account so paypal couldn’t do this to me again. Today I went to pay for a $500 item and I received an error message that the gift card couldn’t be applied because my account is not verified. Does anyone know a way around this? I don’t have any desire to get get their crappy credit card with no rewards. Thanks!!

    1. I’d recommend simply adding a bank account, but double-checking that you’re paying with a card every transaction. I don’t know of a trick to work around the limits that come with an account that doesn’t have a bank account linked.

      Assuming a 2% card, the $400 order is only an $8 mistake. There’s certainly worse things that could happen, but I just try to double-check before clicking submit on each purchase.

  17. is the 5000 limit still in effect??? I do not see it on the webpage? thanks.

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