Expired gift card? Learn the law and make the most of your gift card

Over the weekend I attended the birthday party of one of my best friends. After things got wound up, we reflected on the festivities of the day. Overall, it was a success. But, he assured me that he was not too interested in the number of gift cards he received.



Two – two

Of course, he was grateful for the feeling. And, while some of these cards may come in handy, others are not. For example, she received a card from a clothing store that never patronized. But, her main regret was that she forgot that she had them. As a result, they are unused.

This is not a problem exclusively for my friend. More than half (51 percent) of U.S. adults forget to use their gift card, according to a bankroll poll. This resulted in a loss of $ 15.3 billion nationwide, amounting to about $ 116 per person. There is some good news, though. It dropped to 167 in January 2020.

More than half of Millennials (56 percent) have not spent their gift cards, which cost an average of $ 139 per person, compared to 52 percent for Boomers ($ 113), 47 percent for Gen Xers ($ 112), and 46 percent for Gen Zers ($ 81).

When will people use their gift cards?

Ninety-five percent of respondents who say they have not used an unused gift card, voucher or store credit expect to use it at some point. Of these, more than half plan to use them (51 percent), and fewer (30 percent) plan to use most of them.

Boomers are responsible for the largest share of respondents (63 percent) when it comes to planning to use them the most. Generation Georges (54%), Millennials (42%), and General Georges (32%).

But here’s the problem. If you wait too long, you may be disappointed to find that the gift card has expired. It is estimated that about half (49%) of adults have lost something for free at one time or another.

Problems with expired gift cards

Personally, the thing that grinds my gears with an expired gift card is that it’s a lost-and-lost situation.

For one, it would be an objection to the person who bought the gift card. Suppose my friend didn’t use the 50 gift card in that clothing store? The person who gave her this card could have flushed the toilet with just a 50 bill. And, if they can find out about this, it will probably bother them.

But, if he finally decides to use the gift card only to be told that it has expired? It has a very good chance of not drawing business in a good light. In other words, it’s not going to improve the customer experience. And, since he rarely goes to this store in the first place, it never inspires him to go back.

Now, to be fair, unused gift cards present an accounting problem for businesses. Some large corporations, for example, show that the liabilities of these unused gift cards can be significant;

  • Walmart: 1.9B (2019)
  • Amazon: $ 2.8B (2018)
  • Starbucks: 1.6B (2018)
  • Goal: $ 727m (2018)

But after a certain period of time (usually within six to 24 months), companies can convert these liabilities into breakage income. That’s how much money the company says will not be redeemed from the gift card. So it is basically getting free money company.

Nevertheless, the expiration of the gift card may be in the best interests of the business. In addition to bad PR, it has been found that 75% of people who redeem gift cards spend more than they plan to.

Gift card expiration law and gift card state law

Fortunately, due to the Credit Card Act of 2009, gift certificates and store gift cards do not expire for five years. At the same time, if you do not use your card within a year, issuers may charge you a “inactivity fee.”

All 50 states are subject to this rule. Also, the recipient of the gift card needs to be aware of the terms. This rule includes information on expiration dates. However the receiver has to follow this rule in certain situations in certain states.

Several states have enacted laws regulating gift certificates and gift cards. The store’s gift certificates and gift cards are not allowed to expire or take a latent fee in California (except in certain circumstances), and if the balance is below $ 10, you can use it for cash.

As a fee, it varies from state to state. In some states, for example, card packaging must include the disclosure of any fees. Fees should not apply until one year after inactivity, and if states approve after-sales fees, there should be only one fee per month.

Although some states use their own laws to handle the issue of after-sales fees for gift cards. Fees are charged for the maintenance, activation and transaction during the purchase process. In addition, the gift card must include a statement describing the fees associated with it.

See the State Rules for Gift Cards and Certificates published by the National Assembly of the State Legislature to find out if your state has a law to cover gift cards and certificates. In addition, you can get information about the state’s consumer protection laws from local lawyers.

Ways to make the most of gift cards

By tracking the use of your gift card in a timely manner, you can prevent confusion over expiration dates or fees. And, most importantly, you can maximize your gift cards.

Tips When you receive a gift card

Consider your gift card as cash.

If you received a crisp $ 20 bill on a birthday, holiday, or leisure gift card, you should put it in your wallet right away. For example, the next time you go shopping, it will be accessible. Use the same idea with gift cards. This means that instead of throwing your gift card in the drawer, place it in a place that is more visible. Or you can set up a reminder on your phone to remind you to use the gift card later.

Plan to use it this month.

It is a good idea to make an appointment or reservation for an experience gift card, such as a restaurant, movie theater or spa.

It should not be left unused for more than a year.

Even if you have five years to use the gift card before it expires, that doesn’t mean it will last. For example, if you have a gift card in a restaurant, it may close within three years. Obviously, this means that gift cards cannot be used.

Add it to an app, if applicable.

If you have gift cards from Dunkin ‘Donuts, Uber, Apple, or Amazon, these can be redeemed as a credit to your account so that they can be used as you wish. As a result, you don’t have to worry about losing your physical card or having it with you when you need it.

Sell ​​your gift cards.

Your gift card can be cashed out at the company where it was issued if your state allows it or sites like Raise. If your gift card balance is less than 10, you can usually cash it out, even if you ask the retailer. Another option? Trade unwanted gift cards at Target for Store Credit immediately.

Be strategic.

Using gift cards strategically is another way to save money while redeeming them. If the store already offers a special promotion with your gift card, you are more likely to get a discount or bonus gift.

Tips when you give a gift card

Consider what the person likes.

A gift card is more likely to be unused if it is for a store or service that the recipient does not like or cannot use. Shop at a store that offers lots of targeted items if in doubt. Or, better yet, an option like a Visa gift card that they can use wherever they please.

You should find something convenient for them.

If the recipient is far away from the location, they are less likely to use a theme park gift card or museum membership. In the same vein, avoid giving gift cards so that the gift giver has to spend more than their budget. A $ 25 gift voucher at an upscale restaurant or designer store, for example, isn’t going to cut it.

Buy on sale.

You can save money on gift cards bought at a discount. Even if you buy them at a lower price, their value will remain the same. So, in a way, it’s like getting free money.

Acquisition of gifts.

In addition to earning some bonus prize points, you can also earn them when you buy gift cards. Most rewards programs allow you to purchase gift cards using your rewards points. When you buy a gift card, you should buy from retailers where you are a member of the prize, so that you can earn points. You can then redeem these points for additional savings or free products at a later date.

Additionally, you can use this technique for credit card rewards programs. With your credit card, you can earn cashback or miles even if you are not a member of Retailer Loyalty or Rewards.

Consider an e-gift card.

Those who are digitally native will appreciate the ease of loading a gift card into their wallet and app by sending it directly to their email or text.

Local stores.

Buying gift cards from your favorite small business can be a great way to support them. While this may not save you money, it’s a great way to make sure your money supports your community and local businesses.

In addition, if you know the family or the individual personally, it is a great way to give them additional incentive for revenue and business.

Frequently Asked Questions About Gift Cards

1. How do gift cards work?

Gift cards can be used to buy things at restaurants, gas stations and retail stores. Gift cards can be unloaded at the place where they are accepted after you load a certain amount of money on the card.

There are two types of gift cards: open-loop and closed-loop A gift card that can be used anywhere can be described as an open-loop card. For example, a Visa gift card can be redeemed wherever a visa is accepted.

Conversely, a closed-loop card can only be used on a specific merchant. In other words, if you purchased a gift card from Starbucks or Amazon, you can only use it at the retailer that issued it.

2. How long does the gift card last?

Federal law states that gift cards can expire within five years of purchase. If it is not used within 12 months, its value may be reduced, as fees may be charged for inactivity, dormancy and service. No more than one charge per month, and the fee must be disclosed to the user in advance. Make sure the recipient and you are aware of the fees so they can use their cards at full price.

3. Can I get cash from gift cards if I have a PIN?

Gift cards were considered credit cards at the time of sale because they did not come with a PIN. Since prepaid cards usually have PINs, they can be used in any way.

Since 2013, the Federal Reserve has required that all people be able to get a PIN for a general-purpose gift card, so that they can choose what kind of transaction they want to make. However, as a result of this law, some consumers believe that they can withdraw cash from their Visa gift cards using PINs at ATMs or through a merchant’s sales center. But they can’t. A PIN simply allows debit transactions on gift cards.

Although you will not be able to withdraw money from ATMs or receive cashback from retailers with gift cards, the law allows these transactions, such as Visa reloadable prepaid cards.

4. Where can I sell a gift card?

You can exchange your gift cards for cash. Or through another gift card or cryptocurrency online gift card reseller, and also through a very select retailer. Ideally, you may want to work with reputable gift card resellers who offer consumer protection such as Raise, CardCash, or Gift Card Bin.

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