Gift cards are a popular choice for stocking stuffers during the holiday season, but their value shouldn’t be tucked away and forgotten once the festivities are over. According to the National Retail Federation, Americans are expected to spend nearly $30 billion on gift cards this holiday season, with restaurant gift cards being the most sought-after, accounting for one-third of sales.
While a significant portion of these gift cards will indeed be redeemed, many end up unused or forgotten, leading to a complicated fate for these seemingly simple presents. Some gift cards may have expiration dates or inactivity fees, which can vary depending on state regulations.
Here’s what you should know about the gift cards you give or receive:
- Popularity: Gift cards rank as one of the most popular gifts this holiday season, with almost half of Americans planning to give them, as reported by the National Retail Federation.
- Unused Cards: Unfortunately, many gift cards go unused. They might be misplaced, forgotten, or recipients may hold onto them for a special occasion. A July survey by Bankrate revealed that 47% of U.S. adults had at least one unused gift card or voucher, with an average value of $187 per person, totaling a staggering $23 billion.
- Expiration Dates: Federal law, in effect since 2010, stipulates that a gift card cannot expire for five years from the date of purchase or the last addition of funds. Some states have even longer grace periods. For example, in New York, gift cards purchased after December 10, 2022, cannot expire for nine years. Consequently, many stores have abandoned expiration dates due to varying state laws.
- Spend Them Quickly: Although gift cards may take years to expire, experts advise using them promptly. Some cards, especially generic ones like Visa or MasterCard, can start incurring inactivity fees after one year of non-use, diminishing their value. Inflation also erodes their purchasing power, and if a retailer closes or goes bankrupt, the gift card may become worthless.
- National Use Your Gift Card Day: To prevent your gift cards from gathering dust, consider taking part in National Use Your Gift Card Day, a holiday initiated by a public relations executive and supported by numerous retailers. The next one is scheduled for January 20, 2024.
- Selling Unwanted Cards: If you have a gift card you don’t want, you can sell it on platforms like CardCash or Raise. While you may not receive the full face value, these resale sites typically offer 70 to 80 cents per dollar.
- Unclaimed Funds: What happens to the money on unused gift cards depends on the state where the retailer is incorporated. Retailers can use the money when a gift card is purchased, but they also have to account for the possibility that the card may never be redeemed. In some states, such as Delaware where many corporations are based, retailers are required to work with state unclaimed property programs to return unspent gift card funds to consumers. If consumers don’t claim the funds, they are directed toward public service initiatives instead of company profits.
All 50 states and the District of Columbia maintain unclaimed property programs that collectively return approximately $3 billion to consumers annually. While locating holders of unspent gift cards can be challenging, the rise of digital cards with recipient names has helped. Consumers can also search for unclaimed property, including gift card funds, on the MissingMoney.com website, which is jointly operated by state unclaimed property offices and allows users to search for unclaimed funds by name.
