Here’s what happens to the billions of dollars each year that go unspent


make gift cards Best Stocking Stuffers - Unless you stuff them in a drawer and forget about them after the holidays.

Americans are expected to spend Nearly $30 billion in gift cards This holiday season, according to the National Retail Federation. Restaurant gift cards are the most popular, making up a third of those sales.

Most of those gift cards will be redeemed. Paytronics, which tracks restaurant gift card sales, says that about 70% of gift cards are used within six months.

But many cards – worth tens of billions of dollars – are forgotten or otherwise unused. That's when the life of a gift card becomes more complicated, with expiration dates or inactivity fees that can vary by state.

Here's what you need to know about gift cards you may be giving or receiving:

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After clothing, gift cards will be the most popular gift this holiday season. According to the National Retail Federation, nearly half of Americans plan to give them up.

But many will remain unspent.

Gift cards are lost or forgotten, or the recipient Hang them up for a special occasion, In a July survey, consumer finance company Bankrate found that 47% of American adults had at least one unspent gift card or voucher, with an average value of $187. This totals $23 billion.

Under a federal law that took effect in 2010, a gift card cannot expire until five years from the time it was purchased or the last time someone added money to it. Some state laws require an even longer period. For example, in New York, any gift card purchased after December 10, 2022 cannot expire for nine years.

Ted Rossman, a senior industry analyst at Bankrate, says varying state laws have caused many stores to stop using expiration dates altogether.

Although gift cards can take years to expire, experts say it's still wise to spend them quickly. Some cards – particularly generic cash cards from Visa or MasterCard – will begin to accumulate inactivity fees if not used for a year, reducing their value. Inflation also makes cards less valuable over time. And if a retail store closes or goes bankrupt, the gift card may be worthless.

Maybe consider emptying your stash on National Use Your Gift Card Day, a five-year-old holiday that was created by a public relations executive and is now supported by many retailers. The next one is January 20, 2024.

If you have a gift card you don't want, one option is to sell it on a site like CardCash or Raise. Rossman says resale sites won't give you face value for your card, but they will typically give 70 to 80 cents per dollar.

What happens to the money when a gift card goes unused? This depends on the state where the retailer is incorporated.

When you purchase a gift card, the retailer can use the money immediately. But it also becomes a liability; The retailer must plan for the possibility that the gift card will be redeemed.

Each year, large companies calculate "breakage", which is the amount of gift card liability that they believe will not be redeemed based on historical averages. For some companies, like Seattle-based Starbucks, breakage is a big profit-driver. Starbucks projects $212 million in revenue from breakage in 2022.

But in at least 19 states — including Delaware, where many of the larger companies are involved — retailers must work with state unclaimed property programs to return money from unspent gift cards to consumers. Money that is not collected from individual consumers is spent on public service initiatives; In the states' view, it should not go to the companies because they have not provided any services to earn it.

All 50 states and the District of Columbia have unclaimed property programs. Combined, they return about $3 billion annually to consumers, says Misha Vershkul, executive director of the Washington State Budget and Policy Center.

It can be difficult to find holders of unspent gift cards, Vershkul says, but the growing number of digital cards that reveal the recipient's name helps. State unclaimed property offices jointly run the website MissingMoney.com, where consumers can search by name for any outstanding unclaimed property, including cash from gift cards.

Copyright 2023 The associated Press, All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.



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