Don't be 'breakage' -- 7 tips to avoid losing gift card value
love gift cards, but many of those pieces of plastic go partially or entirely
unused. Some are lost or forgotten. Others simply are ignored once the balance
drops to a few dollars or less.
A gift card's unused value -- known in industry
parlance as "spillage" or "breakage" -- long has meant big profits
for the gift card issuers.
But the federal
Credit Card Accountability, Responsibility and Disclosure Act of 2009 -- better
known as the Credit CARD Act -- tightened
rules on retailers, making it more difficult for stores to cancel unused cards
or charge inactivity fees. That prevents retailers from quickly cashing in on
addition, savvy consumers are catching on, and appear to be finding ways to avoid
the most recent figures from CEB TowerGroup, about 1 percent of the total value
of gift cards was predicted to go unused in 2013. That's down from a high of 10 percent in 2007. Brian Riley,
senior research director at CEB
TowerGroup, says some of the reduction in
breakage is a result of growing cardholder realization that "'even though
there's only $2.12 on my gift card, I've got to find a way to use it."
even with the decline in breakage, around $1 billion worth of
gift cards will be lost to fees and expiration dates, or misplaced, shoved in a
drawer or otherwise neglected this year, according to CEB TowerGroup. That's a
huge amount of money that consumers will not be able to use toward a new shirt, stuffed animal or
Retailers love when people use gift cards because studies show that most
customers spend more in the store than the card is worth. Breakage makes gift cards even more profitable: With CEB
TowerGroup projecting that an estimated $127 billion in gift cards will be sold in 2014, even a small percentage of unused cards boost a company's bottom line.
profits make it feasible for retailers to make some consumer-friendly moves,
such as selling gift cards at a discount. However, most of the money goes toward other endeavors.
like Wal-Mart may have a billion dollars (in unused gift cards) sitting
there," says Dan Horne, a gift card expert and associate professor of marketing
at Providence College in Rhode Island. "Wal-Mart could go out
and build 30 new superstores without borrowing a penny. They know those gift
cards will come in eventually, but for now, they have the use of that
7 ways to make sure you're not 'breakage'
you let a card sit untapped, the less likely you are to use it. Here are eight
ways to make sure your gift cards are not lost to breakage:
1. Corral your cards. Make sure
you can quickly locate your cards by storing them all in the same place, says
Jackie Kelley, a professional organizer and owner of Clearing House, a Bethesda, Maryland, business that provides
professional organizing services.
If you have
too many cards to tuck into your wallet, Kelley recommends stowing them in a
durable plastic envelope. Or upgrade to a Card Cubby (about $24 at CardCubby.com), which includes alphabetized tabs and is tiny enough to keep in
2. Read the fine print. The CARD Act
prohibits gift card inactivity fees for the first year, and requires that gift cards cannot expire within five years of when activated. State laws may extend additional gift card protections. That gives you a big, but not permanent, cushion of time to use the cards, so know what yours is.
3. Plan your shopping ahead of time. Set up your
e-mail program to send you a monthly reminder to use your gift cards.
Kelley also recommends mentally plotting your errands. "Think
in terms of the week or month ahead," she says. "When will you be
near the store? What items do you need there? Is there a gift you need for
someone else? You
are more likely to use the card if you know what you want ahead of time and can
get in and out quickly."
4. Trade or sell your cards. If you get a
card you know you will not use -- a Hot Topic gift card, for instance, when you
are more of an L.L.Bean type -- use one of the many card-swapping and card-selling
sites to get what you really want. Such sites include Cardpool.com, Swapagift.com
5. Give low-end cards as gifts. To make sure
your gift card doesn't languish in someone else's wallet, consider purchasing
cards at Walgreens and Wendy's instead of Nordstrom and Saks. According to CEB TowerGroup,
practical gift cards, such as those for fast-food chains and discount retailers,
are used faster than cards to fine dining establishments and pricey department
because with a Wendy's and a Walgreens on practically every corner, such
lower-end cards simply are more convenient to use. They also offer more value
for your card. "If you give a Wal-Mart gift card to your mailman, there
are plenty of things to use it on," says Riley. By contrast, a $25 gift
card to Brooks Brothers will not get the postal carrier more than a pair of socks,
6. Rethink general-purpose gift cards. Gift cards
from credit card companies can be used anywhere you can use a credit card. But
these cards also come with drawbacks.
Use-anywhere cards, known as open-loop cards, are more likely to come with startup fees and monthly inactivity fees that chip away at your balance. Many of
these gift cards also include a "valid through" or "good through"
date stamped on the front. Your card's underlying value
will not expire after that date, but you will have to call customer service for
a replacement card. And that raises the risk that you will simply toss the card
-- and your remaining balance.
7. Give again. Instead of letting that last two bucks on a card go to waste, use it to make a donation. Websites such as Charity Choice and Gift Card Giver stockpile cards and combine them into higher-value gift cards that are donated to the needy.
Giver founder Jeff Shinabarger got the idea when he asked a group of
acquaintances how many had unused gift cards sitting in their wallets. "They
literally started pulling out gift cards from their wallets," he says.
"Everyone had one."
offered to redistribute the unused cards to the needy, and a new nonprofit was
See related: Gift cards 2013: Reload, please, Video: How to wrap gift cards with pizzaz
Published: September 17, 2014