As Americans flock to purchase nearly $30 billion in gift cards this holiday season, the popularity of these convenient presents brings forth challenges related to unspent balances, expiration dates, and an uptick in scams, according to CBS News. With restaurant gift cards leading the sales, comprising one-third of the total, understanding the intricacies of its usage becomes crucial.
According to Paytronix, around 70% of cards are redeemed within six months, but a significant portion, valued at tens of billions of dollars, remains unused. The
consumer finance company Bankrate revealed that 47% of U.S. adults possess at least one unspent gift card or voucher, totaling $23 billion. Federal law prohibits the cards from expiring for five years, but some state laws extend this period further. New York, for instance, mandates a nine-year expiration period for those purchased after Dec. 10, 2022.Despite the longevity, consumers are advised to spend them promptly. Certain cards, particularly generic ones from Visa or MasterCard, may accrue inactivity fees after a year of non-use, diminishing their value. Inflation also contributes to the decreasing value of cards over time.
Furthermore, the gift card could become worthless if a retail store closes or faces bankruptcy.
While Jan. 20, 2024, marks National Use Your Gift Card Day, providing an opportune moment to clear out unused cards, there are alternatives for those who want to part with unwanted cards. Resale sites like CardCash or Raise offer options to sell them, typically yielding 70 to 80 cents per dollar, although not at face value.
The fate
of unspent gift card money depends on the state where the retailer is incorporated. In at least 19 states, retailers must work with state unclaimed property programs to return money from unused cards to consumers. Companies often calculate “breakage,” the anticipated amount as a liability that won’t be redeemed, which becomes a profit-driver for some, like Starbucks, generating millions in revenue.Consumers are also urged to stay vigilant against scams. In 2022, nearly 65,000 consumers fell victim to scams, losing over $228 million, according to
the Federal Trade Commission. Scammers often pose as legitimate businesses, charities, or government agencies, pressuring victims to purchase gift cards and reveal card details. To combat scams, consumers should report incidents to the gift card issuer and attempt to recover funds, as some companies are flagging fraudulent transactions and freezing gift card funds.RELATED CONTENT: TSA Agents Caught Allegedly Stealing From Passengers’ Luggage