As Americans gear up for the holiday season, gift cards are once again a popular choice, with an estimated $30 billion expected to be spent on these versatile presents.
While gift cards are convenient and well-received, it’s essential to navigate potential pitfalls, including expiration dates, inactivity fees, and the risk of forgetting them altogether. Here’s a guide to understanding and maximizing the value of gift cards.
The $23 Billion Unspent Holiday Funds
According to the National Retail Federation, gift cards, particularly those for restaurants, constitute one-third of the $30 billion expected to be spent this holiday season.
However, a significant portion of these gift cards may need to be used or remembered, contributing to a growing issue of unspent funds.
A Bankrate survey revealed that 47% of US adults possess at least one unspent gift card or voucher, with an average value of $187.
This equates to a staggering $23 billion in unused gift cards, emphasizing the need for consumers to be proactive in managing their gift card collections.
Federal law mandates that gift cards cannot expire for five years from the time of purchase or the last addition of funds.
Some states, like New York, extend this period, ensuring that gift cards remain valid for up to nine years. Despite these regulations, it’s crucial to note that some cards, particularly generic ones like Visa or MasterCard, may start incurring inactivity fees after a year of non-use.
Experts recommend utilizing gift cards promptly, even if they have a lengthy expiration period. Inactivity fees, potential devaluation due to inflation, and the risk of a retailer going out of business can all impact the value of a gift card over time.
National Use Your Gift Card Day, observed on January 20, 2024, provides an excellent opportunity to clear out your gift card stash.
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Unlocking Gift Card Value
For those with unwanted gift cards, selling them on reputable resale sites like CardCash or Raise is a viable option. While sellers may not receive the full face value, these platforms typically offer 70 to 80 cents per dollar, providing a way to recoup some value.
When a gift card remains unused, what happens to the money? The answer depends on the state where the retailer is incorporated.
Retailers must plan for potential gift card redemptions, and every year they calculate “breakage,” the portion of gift card liability they anticipate won’t be redeemed.
In some states, retailers must work with unclaimed property programs to return unspent gift card funds to consumers.
All 50 states and the District of Columbia operate unclaimed property programs that return around $3 billion to consumers annually.
Digital gift cards that include the recipient’s name make it easier to locate holders of unspent gift cards. MissingMoney.com, a joint initiative by state unclaimed property offices, allows consumers to search for any unclaimed property, including cash from gift cards.
As the holiday season unfolds, understanding the nuances of gift cards is crucial for both givers and recipients.
By being proactive, utilizing gift cards promptly, and exploring resale options, consumers can ensure they maximize the value of these popular presents while avoiding potential pitfalls.
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