'Tis the season for stockings, mistletoe, and of course, gift cards! These little plastic wonders make the perfect stocking stuffers, bringing joy and excitement to those lucky recipients. But, dear reader, I must caution you against the perilous fate that awaits many gift cards – the dreaded drawer of forgotten dreams.
According to the National Retail Federation, Americans are projected to spend a staggering $30 billion on gift cards this holiday season. That's a whole lot of gifting power! Unsurprisingly, restaurant gift cards reign supreme, accounting for a third of all gift card sales. However, despite their popularity, a significant portion of these little treasures will end up undiscovered or unused.
Picture this: a gift card, lovingly given, yet sadly lost. Or perhaps tucked away as a special treat for another day. In a survey conducted by Bankrate, it was revealed that 47% of adults in the United States possess at least one unspent gift card or voucher, with an average value of $187. That adds up to a whopping $23 billion sitting idly, waiting for redemption.
Fear not, for the gift of time has graced the world of gift cards. Thanks to a federal law implemented in 2010, gift cards are protected from expiration for a period of five years from the date of purchase or the last time funds were added to them. Some states even go above and beyond, extending this period further. For example, in majestic New York, any gift card purchased after December 10, 2022, is granted a generous nine-year expiration-free lease on life.
With varying state laws in play, many retailers have opted to do away with expiration dates altogether. After all, who needs the stress of urgency when it comes to delighting in a shopping spree? Ted Rossman, a senior industry analyst at Bankrate, highlights this as the reason behind the disappearance of expiration dates from many store gift cards.
While gift cards may take years to expire, experts advise against letting them gather dust. Some cards, especially those generic cash cards bearing the coveted MasterCard or Visa stamp, will start accumulating inactivity fees after just one year of non-use. These fees may nibble away at the card's value, leaving you with less buying power than you initially envisioned. And let us not forget the wicked clutches of inflation, which can diminish the value of a gift card over time. Furthermore, unexpected closures or bankruptcies of retail stores can turn a once-cherished gift card into a burden. It's a harsh reality, but one that prompts us to recommend using your gift cards sooner rather than later.
For those who find themselves with a stack of unwanted or unused gift cards, fear not! There is a glimmer of hope. Websites like CardCash or Raise offer the opportunity to sell your unwanted cards. While you may not fetch the full face value, these platforms typically offer around 70 to 80 cents per dollar. Hey, it's better than having a wallet full of plastic that serves no purpose, right?
But what happens to all that money when a gift card goes unclaimed or forgotten? Well, dear reader, the answer lies in the state where the retailer is incorporated. When a gift card is purchased, the retailer can tap into that money right away. However, it also becomes a liability because, hey, there's always a chance someone might actually use it. To account for this liability, big companies calculate 'breakage' annually – the estimated amount of gift card value that won't be redeemed based on historical usage patterns. Interestingly, some companies, like the Seattle-based Starbucks, actually see breakage as a lucrative profit stream. In 2022 alone, Starbucks reported a mind-boggling $212 million in revenue from unclaimed gift card value. It's enough to make you want to swap your caffeine addiction for sipping on the sweet nectar of breakage profits!
Now, here comes a twist! In certain states, including Delaware where many major corporations are incorporated, retailers are required to work with state unclaimed property programs. These programs ensure that unspent gift card funds are returned to consumers. It's a noble endeavor, aiming to prevent companies from holding onto unused funds without truly providing a service. If an individual consumer fails to claim their funds, it goes towards funding public service initiatives. It's a financial circle of life, if you will.
You'll be thrilled to know that all 50 states and the District of Columbia have their own unclaimed property programs. Collectively, they return roughly $3 billion to consumers each year. Misha Werschkul, the executive director of the Washington State Budget and Policy Center, acknowledges that finding the rightful owners of unspent gift cards can be a bit of a treasure hunt. Thankfully, the rise of digital gift cards, which often include the recipient's name, has made the search a little more straightforward. Now, consumers can visit the joint website MissingMoney.com, where they can search their names in pursuit of unclaimed property – including those precious gift card funds waiting to be reclaimed.
So, dear reader, as you deck the halls and exchange gifts this holiday season, keep these gift card tips in mind. Cherish your gift cards, honor their expiration dates (or lack thereof), and remember that time can sometimes be the greatest enemy. And hey, if you find yourself with a stash of unwanted cards, there's always the option to sell or even reclaim your lost funds. Happy gifting, and may your stockings be filled with delightful surprises and unforgettable experiences!
