Let’s delve into the destiny of unspent gift cards.
Looking for the perfect stocking stuffer? Gift cards are an excellent choice, as long as you don’t tuck them away and forget about them once the holiday season is over.
This festive season, Americans are projected to splurge nearly $30 billion on gift cards, with restaurant gift cards leading the pack at one-third of total sales, according to the National Retail Federation.
Surprisingly, around 70% of these gift cards are promptly redeemed within six months, as reported by Paytronix, a restaurant gift card sales tracker. However, tens of billions of dollars’ worth of gift cards end up abandoned or unused, leading to a complex situation involving varying expiration dates and potential inactivity fees by state.
Here’s what you need to know about the gift cards you’re giving or receiving:
Cherished but Neglected
Following clothing, gift cards rank as the second most popular holiday present. Nearly half of Americans plan to gift them, yet a substantial number will remain unspent. A Bankrate survey in July revealed that 47% of U.S. adults possessed at least one unredeemed gift card or voucher, with an average unused value of $187 per person, totaling $23 billion.
The Gift of Time
Since the implementation of a federal law in 2010, gift cards can’t expire for at least five years from the purchase date or the last addition of funds. Some state laws demand an even lengthier period; for instance, in New York, any gift card purchased after Dec. 10, 2022, won’t expire for nine years. Differing state laws have prompted many stores to eliminate expiration dates altogether.
Use It or Lose It
While it may take years for gift cards to expire, experts recommend using them promptly. Some cards, especially generic ones from Visa or MasterCard, may accumulate inactivity fees after a year of non-use, diminishing their value. Inflation also plays a role in making cards less valuable over time, and in the event of a store closure or bankruptcy, a gift card could become worthless.
Consider utilizing National Use Your Gift Card Day, celebrated on Jan. 20, 2024, to clear out your stash.
Or Sell It
Uninterested in a particular gift card? Consider selling it on platforms like CardCash or Raise. Though resale sites won’t provide face value, you can typically get 70 to 80 cents per dollar.
Follow the Money Trail
What happens to the money when a gift card remains unused? The answer depends on the state where the retailer is incorporated. Retailers can use the money from gift card purchases immediately, but it also becomes a liability. Companies calculate “breakage,” the amount of gift card liability they believe won’t be redeemed based on historical averages.
In at least 19 states, including Delaware, where many major companies are incorporated, retailers must collaborate with state unclaimed property programs. These programs ensure that money from unspent gift cards is returned to consumers, either individually or through public service initiatives if not claimed.
Claim What’s Yours
All 50 states and the District of Columbia have unclaimed property programs that collectively return around $3 billion to consumers annually, according to Misha Werschkul, the executive director of the Washington State Budget and Policy Center. While finding holders of unspent gift cards can be challenging, the increasing prevalence of digital cards with recipient names can assist. State unclaimed property offices jointly operate the website MissingMoney.com, allowing consumers to search for any unclaimed property, including cash from gift cards, by name.