Gift cards are an easy go-to gift with no hassle and are considered a win-win for both the buyer and recipient; however, many people have unused gift cards in their possession. According to a recent survey conducted by Bankrate Credit Cards, half of the population in the U.S. have unused gift cards with a combined value totaling more than $20 billion.
A survey of 2,600 Americans found that the average person is carrying around $167 in gift cards. Most people are quick to use the cards, as the survey indicated that 70% of all gift cards are redeemed within six months.
There are, however, a number of reasons why gift cards aren’t ideal. Some people lose them, forget about them, let them expire, or fail to spend the full amount.
Of those who still carry unused gift cards in their wallets or purses, 64% believe they will eventually use them, while only 4% said they will never use them. The survey reports that annual income also contributes to the likelihood of gift cards going unused. Those who make well over $80,000 a year are more likely to let the card expire.
Charles H. Thomas III, a financial planner and founder of Intrepid Eagle Finance said, “Gift cards don’t take up much space in a drawer, but that doesn’t mean you should let them sit forever.”
The 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act was created to prevent corporations from raising interests on credit cards yet this also applies to gift cards with “inactivity fees.” The CARD Act also allows individuals up to five years to use their gift cards before they expire.
Still, even with federal protection, there are some cards that can be charged “inactivity fees” in certain states if they are not used within 12 months. These fees can range from two to five dollars a month.
Big corporations such as Walmart, Amazon, and Starbucks have well over a billion dollars in unused gift card liabilities. These liabilities turn into what’s called breakage income which is the money that companies get for free. Businesses benefit by earning interest on dollars spent on gift cards before the cards are redeemed, and they reap financial rewards when cards expire with remaining balances.
Retailers, however, claim that they make more money when one spends the gift card. Shoppers tend to spend more than the gift card amount. They are more likely to use the gift card to help pay for something that is full price, and gift cards can promote loyalty by prompting new customers to visit the store again.
Ted Rossman, a data analyst for Bankrate, said, “If you’ve been holding onto a gift card from a store you don’t like, there’s nothing wrong with re-gifting it, using it to buy a gift for someone else, or even selling it,”
Consumers can try and exchange gift cards for cash if it has less than $10 dollars. Depending on which state you live in, there are different balance requirements that determine how much cash you can get back. For example, in California, you can get cash if your card has less than $10, but if you live in Montana, balances less than five dollars can be redeemed for cash.
If for whatever reason, one does not use the gift card, there are plenty of options to compensate for it. One option is to sell your unused gift card on a variety of websites such as Cardpool.com, CardCash.com, and GiftCardSpread.com. Depending on which website you are on, it will give back 70% to 80% of the card’s value.
