Smart About Money: Gift cards are “real money”

It’s all too easy to lose track of the reality that gift cards are cash equivalents. A skeptical consumer might wonder if the companies like it that way. After all, every gift card that’s not fully redeemed is “free money” for them. Gift cards that aren’t redeemed at all are obviously even better.

State governments have taken notice and some have passed legislation allowing the state to take unredeemed gift cards as “unclaimed property.”

But that gift card isn’t the company’s money or the state’s money. It’s your money.

At this point, probably everyone has at least one gift card in a drawer or in their wallet – maybe from the holidays last year. Some people have literally dozens of gift cards hanging around, worth hundreds or even thousands of dollars. Making the effort to fully redeem various gift cards can get to seem like a chore, a hassle or even a burden.

Many people do cash in their gift cards quickly. According to, “more than 70% of all gift cards are redeemed within 6 months.”

But doesn’t say if those gift cards are fully redeemed. And having a gift card that you think might have some value on it, but you don’t know how much – that is probably the most common “wasted gift card” situation of all.

Another danger of loss to the consumer is that gift cards can also become worthless if the company they’re for goes out of business.

Since gift cards are here to stay, it pays to come up with a personal strategy for dealing with them so that you get the maximum value from each one.

For starters, make it a habit to use a gift card as quickly as possible. If it’s a card that doesn’t have the value printed on it, note the value on the card because it can be impossible to remember after a while. (Keeping the receipt with the card also works.)

If you have gift cards that you don’t know the remaining value of, you may be able to check the balance online or at the business that it’s for. Employees at cash registers can easily run a card through for you and then you’ll know whether you have $100 on it … or just 14 cents!

If a friend or relative regularly gives you gift cards for places you aren’t interested in, you could have a talk with them about alternatives. Because presumably they would rather have you make use of the card they spent good money on than have it forgotten in a drawer.

You may have gift cards you just know you’re never going to use. While there are online services that allow you to redeem gift cards for cash, it might be faster and easier to ask around and see if a friend or a colleague would buy the card from you.

You may choose to keep a MasterCard or Visa gift card in your wallet in case of an emergency. Just be aware of the terms because non-use fees on some gift cards make them worthless after a period of time.

Don’t wait for “someday” to deal with your gift cards because too often “someday” becomes “never.” Evaluate one card a week – taking a few minutes to figure out the value on it and how you could use the card in the next few days.

As with any decluttering project, chances are you will be delighted with yourself to have tackled it. In the case of gift cards, it will also mean that you will have “free money” to treat yourself with, which is presumably what the person who gave you the gift card hoped for.

And this can never be repeated often enough – no reputable company or government agency (especially the police!) will ever demand that you pay them with gift cards. Any demand for payment via gift cards is a scam. Period.

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