Mystery of Gift Cards: What Really Happens When Billions Go Unused?

Millions of dollars in gift cards go unspent each year, creating a complex lifecycle for these popular presents. Americans are projected to spend nearly $30 billion on gift cards during this holiday season, with restaurant gift cards comprising one-third of those sales.

Despite the popularity, a significant portion of these gift cards, amounting to tens of billions of dollars, end up forgotten or unused. The life of a gift card becomes more intricate when faced with expiration dates or inactivity fees that vary by state.

Here's a breakdown of what happens to these unspent billions:

1. Loved, But Lost:

• Gift cards, often the second most popular present after clothing, are favored by nearly half of Americans. However, a substantial number remains unspent, either lost, forgotten, or held onto for a special occasion.

2. The Gift of Time:

• Federal law stipulates that a gift card cannot expire for five years from its purchase or the last addition of funds. Some states mandate an even longer period, with New York requiring a nine-year expiration for gift cards purchased after December 10, 2022.

3. Use It or Lose It:

• Despite the extended expiration periods, experts advise spending gift cards promptly. Inactivity fees may accrue after a year of non-use, especially for generic cash cards like Visa or MasterCard. Additionally, inflation and the risk of a store closure or bankruptcy can diminish a gift card's value.

4. Sell It:

• Unwanted gift cards can be sold on platforms like CardCash or Raise, albeit at a discount. Resale sites typically offer 70 to 80 cents per dollar rather than face value.

5. The Money Trail:

• When a gift card goes unused, the fate of the money depends on the state where the retailer is incorporated. While breakage (unredeemed gift card liability) is a profit driver for some companies, at least 19 states require retailers to work with unclaimed property programs to return unspent funds to consumers.

6. Claim It:

• All 50 states and the District of Columbia have unclaimed property programs, returning around $3 billion to consumers annually. Gift card holders can search for any unclaimed property owed to them, including cash from gift cards, through websites like MissingMoney.com.

Understanding the journey of unspent gift cards sheds light on the complexities involved, from expiration policies to the financial impact on retailers and the eventual return of funds to consumers through unclaimed property programs.

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