Cash in Your Gift Cards
Tip It!A couple of gift-card related tidbits…
For starters, be sure to use your gift cards. According to an article in the WSJ, Americans spend $65B per year on gift cards (no including bank issued, pre-paid cards), with $6.8B going unredeemed. In some cases, that money becomes “abandoned property” that is collected by the state. In other cases, the retailers absorb the unused balances as pure profit.
Second, I recently read a statistic that people who use gift cards typically spend 1.4x the value of the gift card. If you use a gift card to defray the cost of a more expensive purchase that you might have otherwise made, that’s great. But if a gift card prompts you to spend more than you otherwise would have just to be sure you get that balance down to zero, then you should explore your options.
For example, while out in California over the Holidays, I discovered that you can get cash back at Target if you make a purchase and wind up with a gift card balance of less than $10. The ability to do this likely depends on both state laws and retailer policies (e.g., Target back home doesn’t allow this) but it’s worth checking out.
Published on January 21st, 2010 - 5 Comments
Filed under: Miscellany
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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January 21st, 2010 at 2:36 pm
“The ability to do this likely depends on both state laws and retailer policies…” Actually this is a relatively new CA law that requires all retailers to provide cash back on store gift cards with balances below $10. If the store refuses, they are breaking the law. It doesn’t work for gift cards that work at multiple merchants like MC/Visa logo gift cards, though.
January 21st, 2010 at 3:30 pm
Not only do they have to give you cash back on a balance less than $10, but the cards can’t expire (unless they’re bank gift cards.)
January 21st, 2010 at 4:16 pm
Let’s just make a pact right now that we will no longer purchase these cards as gifts for now on. Just write checks.
January 21st, 2010 at 4:49 pm
Mark,
If I have a visa/mc/amex with a random low ammount I always use it on a recurring online paid cost:
http://www.myjourneytomillions.....ift-cards/
January 21st, 2010 at 4:57 pm
Gift cards are the way forward. I got a ton of them for Christmas and that has been pretty much what I have been living off of. I cannot say enough about them. Although a bank gift card is so much better because I don’t have to have 10 different cards for all the different places.