Giving a gift card? Might as well throw your money away

Photo courtesy of National Retail Federation

By: Tawny Maya McCray

Over $45 billion wasted on America’s favorite gift.

Gift cards are a popular present for the holidays, but people aren’t always great at using them. Whether we lose the card at the bottom of our purse or just simply throw it away, the fact is that $45 billion in unused gift card balances has accumulated since 2005. According to The Wall Street Journal, nearly 10% of all gift cards end up unused, partially used or forgotten. Familiarizing yourself with the laws and statistics around gift cards can help you become a better gift-giver and a smarter saver.

Despite their neglect, gift cards remain a desirable present. More than 60% of participants surveyed by the National Retail Federation in 2016 said they wanted a gift card that holiday season so they could buy exactly what they want. Gift cards to Amazon, Visa, Walmart, American Express and iTunes are highly coveted, according to the personal finance website WalletHub. Rounding out the top 10 are gift cards to Starbucks, Target, eBay, Google and Sephora.

It’s hard to believe that such a sought-after gift is so frequently wasted. Interestingly, the unspent money from gift cards — known in the industry as spillage or breakage — has actually declined in the last decade. According to WalletHub, spillage was estimated at $8.2 billion in 2007 but dropped to $5.2 billion by 2009 and to $2.2 billion the following year.

This decline may be attributed to the Card Accountability, Responsibility and Disclosure Act passed in May 2009. The CARD Act states, in part, that gift cards can’t expire for five years, which gives recipients more time to hold on to the cards before using them. Prior to 2009, companies were allowed to charge fees or institute penalties on unused gift cards. Alternatively, some spillage is caused because the recipient does not live in the area where the company issuing the card does business. And others may not want the services or products available with the card.

State governments have also addressed the amount of money sitting in unused cards. According to The Associated Press, at least 30 states have enacted escheat laws that allow them to treat gift card spillage as unclaimed property after the cards expire. This means that if the law requires it, businesses must record unused gift card sales and eventually turn that money over to the state.

The Better Business Bureau advises consumers to be aware of the state and federal rules that govern gift card sales. According to these rules, an inactivity fee cannot be charged until the card has not been used for 12 months. However, you may be charged to replace a lost or stolen card. Gift cards cannot expire for at least five years or five years from the last date additional money was loaded onto the card. No more than one fee of any kind can be charged to the cardholder in a single month. The expiration date must be clearly disclosed on the card, and any fees must be disclosed as well. You should also see a toll-free phone number or website where you can get more information. A one-time fee can be charged when you buy the card, though this generally only applies to gift cards purchased through your credit card company, not those purchased directly from stores or restaurants. The bureau staff advises the public to redeem gift cards as promptly as possible.

If you receive an unwanted gift card, you still have some money-saving options. Websites such as Cardpool, and CardCash allow users to sell gift cards they will not use. You can also swap gift cards with a friend or donate the card to a charity organization.

Next time you go Christmas shopping, keep these spending trends in mind so your thoughtful present is appreciated and used up, and make sure it’s for someone with an organized wallet.

Copyright 2019 CREATORS.COM


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