Do you have any gift cards you received from friends over the holidays that are still gathering dust? Well, you are not alone. Many Americans let the money on their gift cards go to waste each year. As a matter of fact, up to $3 billion worth of gift cards goes unspent, according to Finder.com.
Unfortunately, any unspent money on gift cards is usually sent back to the retailer or bank, who are obviously happy to have it back. Your part of the bargain as the recipient is accepting the gift and spending it before it expires and goes back to the bank or retailer.
Billions On Gift Cards Going Unused
Statistics indicate that approximately half of all gift card recipients redeem them within two months. Of the remaining half, about 80% are spent within a year, leaving approximately 20% of gift cards going unused after a whole year from purchase. Other estimates even show that as much as 3% of gift card dollars go unredeemed. In 2019 alone, almost $3 billion in gift card dollars went unused. Meanwhile, the total gift card spending in that year turned out to be $98.6 billion.
You should also note that, despite various federal protections, some gift card issuers can still charge you “inactivity fees” if you don’t use your card within 12 months. Depending on your state, the fees might range from $2 to $5 every month. This makes it difficult to pin down your gift card balance after several years of non-use.
Unused Gift Card Dollars Could Be Free Money for Companies
When gift cards are sold, they are considered a liability until they are spent. The money only counts as revenue once it is spent. That means that US businesses incurred $3 billion in liabilities on unspent cards in a single year.
But after a specified amount of time (usually, 6-24 months), most state laws permit companies to turn gift card liabilities into what’s referred to as breakage income. That is the amount of gift card dollars that the company estimates users will never redeem. In other words, that’s the amount of money the retailer or bank is essentially getting for free.
Break the Breakage Income Cycle!
Since breakage income is grounded entirely on customer behavior, consumers hold the power to break the cycle. So, don’t let your gift cards gather dust, stuffed into your drawer and forgotten, or get lost in your bag. Let Prepaid2Cash help you convert your gift card to cash! Download the Prepaid2Cash app from the App Store or Google Play and claim your breakage income in as little as 15 minutes.