Gift cards are great stocking stuffers. But as long as you don’t stuff it in a drawer and forget about it after the holidays, it’s fine.
Americans are expected to spend nearly $30 billion on gift cards this holiday season, according to the National Retail Federation. Restaurant gift cards are the most popular, accounting for one-third of his sales.
Most of these gift cards are redeemable. Paytronix, which tracks restaurant gift card sales, says about 70% of gift cards are used within six months.
But many of these cards, worth tens of billions of dollars, are forgotten or go unused. This is when gift card expiration dates can vary by state and become more complex, including expiration dates and inactivity fees.
Here’s what you need to know about gift cards you give or receive.
Loved but lost
After clothing, gift cards are likely to be the most popular gift this holiday season. According to the National Retail Federation, nearly half of Americans plan to give a gift.
But much will remain unused.
Gift cards may be lost or forgotten, or recipients may keep them for special occasions. A July survey by consumer finance company Bankrate found that 47% of U.S. adults have at least one unused gift card or voucher worth an average of $187. The total amount is $23 billion.
gift of time
Under federal law that went into effect in 2010, gift cards don’t expire at the time of purchase or for five years after someone last added money to them. Some state laws require longer periods. For example, in New York, gift cards purchased after December 10, 2022 will not expire in his nine years.
Ted Rothman, senior industry analyst at Bankrate, said differences in state laws are one reason many stores have stopped using expiration dates altogether.
Use it or lose it
Although gift cards may take years to expire, experts say it’s wise to use them up quickly. Some cards, especially general-purpose cash cards from Visa and MasterCard, start accruing inactivity fees after a year of inactivity, which reduces the card’s value. Inflation also reduces the value of your card over time. Additionally, if a retailer closes or goes out of business, a gift card may lose its value.
Perhaps you could consider cleaning out your stash on National Use Your Gift Card Day, a five-year-old holiday created by a public relations executive and now sponsored by several retailers. Is not it. Next time he will be on January 20, 2024.
or sell it
If you have gift cards that you no longer need, one option is to sell them on sites like CardCash or Raise. Rothman said resale sites won’t list the face value of the cards, but he typically sells them for 70 to 80 cents on the dollar.
flow of money
What happens to the money if the gift card goes unused? It depends on the state in which the retailer is incorporated.
When you purchase a gift card, the retailer can use that money right away. But it also becomes a responsibility. Retailers should plan for the possibility that gift cards will be used.
Each year, major companies calculate their “loss” amount, which is the amount owed on gift cards that are unlikely to be redeemed, based on historical averages. For some companies, like Seattle-based Starbucks, corruption is a huge profit driver. Starbucks reported that its revenue from breakage in 2022 was US$212 million.
But at least 19 states, including Delaware, where many large companies are incorporated, require retailers to work with state unclaimed property programs to refund consumers from unused gift cards. . Money not collected by individual consumers is spent on public service initiatives. In the states’ view, that money shouldn’t go to companies because they didn’t provide the services to earn it.
claim it
All 50 states and the District of Columbia have unclaimed property programs. Together, they return about $3 billion a year to consumers, said Misha Vershkul, executive director of the Washington State Budget and Policy Center.
Vershkul said finding the owner of an unused gift card can be difficult, but the rise of digital cards with the recipient’s name on them could help. The state’s Unclaimed Property Office jointly operates his website, MissingMoney.com, where consumers can search for unclaimed property by name, including cash in gift cards.
