Get Some Gift Cards This Year? Here's What Suze Orman Says to Do With Them

Don't spend your gift cards without reading this first.

If you received gift cards over the holiday season or for other special occasions, you may be wondering what the best use of them is. While you could just head to the store and spend the money, Suze Orman has some tips for using gift cards as wisely as possible.

Here are the two things Orman suggests doing when a gift card has ended up in your wallet.

1. Buying essentials with the gift card

Orman suggests that any gift card that can be used for necessities should be used for that purpose, rather than just for buying things you want.

"If you have a gift card from a general retailer that sells groceries, or home supplies, or anything that qualifies as a 'need,' I sure hope you will spend your gift card on one or more essentials," Orman said. She acknowledged that this may not be your first preference when someone has given you a gift, but thinks it's the smartest move you can make with the card.

"Please don't 'oh, Suze' me with a story that your relative/friend/boss gave you the card as a gift, not to help you pay for essentials. I don't think that's really true. They gave you the card for you to decide what you'd like most. What you would value. Using the card to pay for essentials is my definition of making the most of a gift," Orman advised.

Orman is absolutely right to make this recommendation. If you use the gift card to buy things you need, these are items that won't have to be put on your credit cards or come out of your bank account. You can free up some cash to save money, use it for other important goals, or use it for "wants" you've already built into your budget rather than just randomly splurging since someone happened to give you a gift card.

2. Selling the gift card for cash

If you cannot use your gift card for essentials because the store it is for doesn't sell them, Orman suggests taking an unconventional approach. Rather than buying things with the card at a store that only sells "wants," she advises converting your gift card into cash by selling it -- even though you're likely to get only about 80% to 90% of its value when you do so.

"If trading in gives you cash to put towards a need, I think it's a reasonable tradeoff," she says, regarding selling for less than the card is worth. She believes you're better off getting a portion of the money to use for your emergency fund, debt payoff, or retirement investing rather than spending all of it on something you don't really need.

This advice may also make sense for many people, unless you were genuinely going to splurge on a "want" regardless of whether you got the gift card to do it -- and you had already built that "want' into your budget.

Ultimately, if you can use the gift card in a way that improves your financial situation by following Orman's advice, this is the best gift you can give yourself.