Has anybody used the "Gift Card" option to pay for TER membership? I like the idea of not using my credit card. (For any who haven't see it, there's an option to put in a gift card PIN from, say, Starbucks or Best Buy to pay for membership.) I'm not clear how the value of a gift card can be transferred and wondered if anybody has experience using this option.

I haven't used the GC option with TER. Basically, there is a third party company involved. TER used to use Paygarden but I can't figure out who they currently use.  
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You buy a GC anonymously for $100 cash.
The third party monetizer agrees to pay you $80 for your $100 GC. (Monetizer is now -80)
The third party plans to sell what was your $100 GC to someone else for $90 or $95. (+10 or +15)
The third party has agreed with TER to give them $85 or $90 of their take on your $100 GC. (net +5)
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Not all monetizers are set up with BUSINESS clients to handle payments but only buy from and sell to individuals. The company TER uses is set up for TER to anonymize your info, let you pass through your GC info to the company, and make sure that your payment gets properly and credited to "Bob Crane".  
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GC redemption rates vary depending on supply and demand. Some cards will get you 80% of face value; some a lot less. That is, a $40 Target card might get you 34 days of VIP; a $40 Omaha Steaks card might get 30 days.
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There are several companies that monetize GCs. You can also find companies that will convert your airline miles into cash (~1 to 2 cents per mile).  Anybody remember "S&H Green Stamps"? If they were still around there would probably be some entrepreneur with a way to convert your coupon books to cash.
http://en.wikipedia.org/wiki/S%26H_Green_Stamps

Yes, I used a Starbucks card to pay for membership a few years ago.  Worked fine.  As described above, TER will give you some fraction of the value of your card.  I recall something like getting $35 credit for a $50 Starbucks card for 2 month VIP membership, or something like that.

Good, thanks for the feedback.

Have not been able to use my credit card for membership transactions and it’s not my bank that’s blocking the transaction. Never had an issue in the past but the new service is not taking the process. Anyone else having issues?

Yes that’s how I pay for mine, very easy and discrete