Gift cards make great stocking stuffers — as long as you don't stuff them in the closet and forget about them after the holidays.
According to the National Retail Federation, Americans are expected to spend nearly $30 billion on gift cards this holiday season. Restaurant gift cards are the most popular, accounting for about a third of those sales.
Most of those gift cards are redeemable. Paytronix, which tracks restaurant gift card sales, says 70% of gift cards are used within six months.
But many cards — worth tens of billions of dollars — are forgotten or unused. A gift card's lifespan can become more complicated when it varies by state with expiration dates or inactivity fees.
Here's what you need to know about gift cards you give or receive:
Loved, but lost
After clothing, gift cards are the most popular gift this holiday season. According to the National Retail Federation, nearly half of Americans plan to give them away.
But many remain unspent.
In a July survey on gift cards being lost or forgotten, consumer finance firm Bankrate found that 47% of US adults have at least one unspent gift card or voucher worth an average of $187. This is a total of 23 billion dollars.
A gift of time
A federal law that went into effect in 2010 requires that a gift card not expire until five years after it was purchased or when someone last added money to it. Some state laws require even longer. For example, in New York, gift cards purchased after December 10, 2022 will not expire for nine years.
Different state laws are one reason why many stores are phasing out expiration dates altogether, says Ted Roseman, senior industry analyst at Bankrate.
Use it or lose it
While gift cards can take years to expire, experts say it's still smart to spend them quickly. Some cards — especially common cash cards from Visa or MasterCard — start adding inactivity fees if they're not used for a year, erasing their value. Inflation reduces the value of cards over time. If a retail store closes or goes bankrupt, a gift card may be worthless.
Consider emptying your stash on National Use Your Gift Card Day, a five-year holiday created by a public relations executive and now supported by many retailers. Next is Jan. 20, 2024.
Or sell it
If you have a gift card you don't want, one option is to sell it on a site like CardCash or Raise. Resale sites won't give you face value for your cards, but they'll typically give you 70 to 80 cents on the dollar, Roseman says.
What happens to the cash if the gift card goes unused? It depends on the state in which the retailer is incorporated.
When you buy a gift card, the retailer can use the money right away. But it also becomes a liability; The retailer should plan for the possibility of receiving a gift card.
Each year, large companies calculate the “breakage,” which is the amount of gift card liability they believe will not be recovered based on historical averages. For some companies, such as Seattle-based Starbucks, breakage is a big profit-driver. Starbucks expects to break even by 2022 with $212 million in revenue.
But in at least 19 states — including Delaware, where many of the big companies are incorporated — retailers must work with state unclaimed property programs to return money from unspent gift cards to consumers. Money not recouped by individual consumers is spent on public service initiatives; From the states point of view, it should not go to companies because they are not providing a service to earn.
Make a claim
All 50 states and the District of Columbia have unclaimed property programs. Combined, they return about $3 billion annually to consumers, says Misha Vershkull, executive director of the Washington State Budget and Policy Center.
Werschkuhl says that finding holders of unspent gift cards can be tricky, but the number of digital cards that name the recipient is increasing. State unclaimed property offices jointly run a website called MissingMoney.com, where customers can search by name for any unclaimed property they're owed, including money from gift cards.