How to squeeze the last dollar out of gift cards

Some states let consumers cash out small-dollar remnants

By Dana Dratch

7 ways to squeeze the last dollar out of gift cards
7 ways to squeeze the last dollar out of gift cards

You wouldn't throw money away, would you? Then make sure you squeeze every cent out of your gift cards.

"We've all lost gift cards, we've all forgotten to use them, and left balances on them, or wondered what was on them," says Hillary Mendelsohn, author of "The Purple Book: The Definitive Guide to Exceptional Online Shopping."

State laws have made it easier to pull the last few dollars out of your gift cards, in cash, and other strategies can prevent you from losing value.

Want to make sure you drain every cent from your gift cards? These strategies will help:

1. Use it quickly

Inactivity fees and expiration dates can mean that when you finally reach for the card,  you will have less to spend than anticipated.

While federal law mandates that gift cards have to be good for at least five years, some states extend those dates further, or prohibit expiration dates for some types of gift cards.

Mendelsohn urges consumers to check and keep track, "so you don't lose the value of the card."

After a year of nonuse, card issuers in many states can impose inactivity fees, says Christina Tetreault, a staff attorney for Consumers Union. Issuers can levy those fees once a month until the card is used. Other states prohibit inactivity fees, and not all gift card issuers levy them.

You also want to avoid getting stuck with a card from a store that later goes out of business, says John Breyault, vice president of public policy for the National Consumers League. If you are not using a card right away, keep tabs on the store, he says. And if it is filing for bankruptcy (or looks like it may), use that card immediately.

2. Cash out your card

In some states, consumers with a "closed loop" gift card can ask for the remaining balance in cash once the card balance hits a certain threshold. A "closed loop" card is a gift card good for use at one store, retail chain or group of related merchants. While use may be limited to certain stores or chains, you typically don't pay a fee to buy these cards.

In 11 states, shoppers with "closed loop" cards who spend down the balance to a minimum threshold can request the remainder of the card balance back in cash, according to the Retail Gift Card Association.

You can make the cash request at the time of a purchase, but in some cases, the clerk may not be aware of the policy, Tetreault says. "Sometimes the clerk doesn't know," she says. "I'll say, 'I would like the last few pennies back in cash,' and they're like, 'I don't know if I can do that.'" On such occasions, she sometimes goes to customer service. Other times, not. "Sometimes it's not worth it for 57 cents."

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Eleven states allow consumers to cash out remnant balances on "closed loop" cards. The minimum balances required before such a request can be made are noted.
California less than $10
Colorado $5 or less
Massachusetts 10 percent of face value
Maine less than $5
Oregon less than $5
New Jersey less than $5 (if the original value was more than $5)
Montana less than $5 (if the original value was more than $5)
Rhode Island less than $1
Texas $2.50 (if the original value was more than $5)
Vermont less than $1
Washington less than $5
Some of these rules may also apply to some "open loop" cards, so check your local laws. Source: The Retail Gift Card Association, September 2015

3. Understand your card

Gift cards that can be used anywhere, and display a card network brand (such as American Express, MasterCard or Visa), are known as "open loop" cards.

They can be used at any merchant that accepts the card brand. But that flexibility comes with a drawback: Buyers of "open loop" cards typically pay a fee in addition to the card's face value.

A third type of gift card is the loyalty, award or promotional gift card. Typically, these cards are given out as special bonus when you switch telephone or TV service, or when you buy appliances. Cards in this third category are not covered under the Credit Card Accountability Responsibility and Disclosure Act of 2009. Unlike standard gift cards, which are under the law cannot expire in less than five years, rebate and promotional cards may expire quickly -- in as little as a few months. They don't qualify for protection under state laws, either.

How can you tell if your card does not qualify for these extras? They won't say "gift card" on the face of the card. Instead, they'll bear words such as  "reward," "promotion" or "rebate." Another telltale sign: The card will show an expiration date.

4. Make your cards easy to use

Keep the card where you will remember it when you go to a certain store, says Breyault.

If you have a dedicated envelope or place in your wallet, "You are much more likely not to forget you have them," says Mendelsohn.

Some people prefer to have gift cards in their mobile wallet. "Gift cards have sort of gone more high-tech," she says. Two apps she likes are Gyft for iPhone and GoWallet for Android.

Depending on the merchant and the card, you also may be able to load your card balance into an online merchant account you can access by phone. But for security's sake, do not link these online accounts to bank accounts or debit cards, and disable any "auto reload" features.

5. Split the transaction

Perhaps you only have a few dollars left on that gift card. In such cases, many merchants will let you apply the remaining balance to a purchase, even if you have to use cash, a debit card or credit card to cover the rest of the total. "It's called a split transaction," says Tetreault.

Tetreault says many retailers accommodate such transactions as long as you notify them before the purchase begins. Most big online retailers can do the same, she says.

The worst kind of gift card is the one that doesn't get used.

-- Hillary Mendelsohn
Author, "The Purple Book"

6. Sell, trade, regift or donate

If you have a gift card you will never redeem, you can sell, regift, trade or donate it. "The worst kind of gift card is the one that doesn't get used," says Mendelsohn.

If you received a card for a store you'll never shop, consider regifting, says Breyault: "Regifting is never a bad idea." You can also swap cards with a friend or family member. 

Another option is to donate the card, or even the remaining balance on a card, to a charity. Some larger retailers will do this for you, Mendelsohn says. There are also companies that collect and pool gift card balances for charity.

You can also call your own favorite nonprofit, and see if it will accept a donation from your gift card.

7. Keep the receipt

Not everything always works perfectly. If you want to make sure you squeeze every dollar out of a gift card, save that receipt.

Receipts can help in several situations, including when:

  • Someone fraudulently drained the balance before the card was purchased.
  • The store clerk didn't activate the card properly.
  • The wrong amount was mistakenly loaded onto the card.

Mendelsohn takes it a step further. "I give the receipt so [the giftee] knows it's an activated card," she says. "So they have some proof."    

See related: How the Credit CARD Act affects gift cards, Discounts: 8 ways to get gift cards for less, Video: Tips for using mobile gift cards , Don't be 'breakage' -- 7 tips to avoid losing gift card value

Published: September 24, 2015

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Updated: 10-27-2016

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