The secret life of gift cards: Here’s what happens to the billions that go unspent each year

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Category: Business

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Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. stocking stuffer / ˈstɒk ɪŋ ˈstʌf ər / (n.) – a small, usually cheap, gift that is placed in a Christmas stocking
    Example:

    We bought small toys and candies as stocking stuffers.


  2. redeem / rɪˈdim / (v.) – to exchange something, such as a coupon or voucher, for money or other items
    Example:

    After months of collecting points, I finally redeemed them for a free meal at my favorite restaurant.


  3. wind up / waɪnd ʌp / (phrasal v.) – to reach a situation that was not planned or expected
    Example:

    If you don’t listen to the weather forecast, you might wind up getting caught in the rain without an umbrella.


  4. expiration / ˌɛk spəˈreɪ ʃən / (n.) – the situation in which something is no longer suitable for use after a certain period of time
    Example:

    Consumers should always check the expiration dates of the products before using them.


  5. inactivity / ɪnˌækˈtɪv ɪ ti / (n.) – a situation in which nothing is happening or there is a lack of activity
    Example:

    The club’s inactivity happens during the holidays when everyone is busy with their families.


Article

Read the text below.

Gift cards make great stocking stuffers — just as long as you don’t stuff them in a drawer and forget about them after the holidays.


Americans were expected to spend nearly $30 billion on gift cards last holiday season, according to the National Retail Federation. Restaurant gift cards were the most popular, making up one-third of those sales.


Most of those gift cards were redeemed. Paytronix, which tracks restaurant gift card sales, says around 70% of gift cards are used within six months.


But many cards — tens of billions of dollars’ worth — wind up forgotten or otherwise unused. That’s when the life of a gift card gets more complicated, with expiration dates or inactivity fees that can vary by state.


After clothing, gift cards were the most popular presents last holiday season. Nearly half of Americans planned to give them, according to the National Retail Federation. But many remained unspent.


Gift cards get lost or forgotten, or recipients hang on to them for a special occasion. In a July 2023 survey, the consumer finance company Bankrate found that 47% of U.S. adults had at least one unspent gift card or voucher. The average value of unused gift cards is $187 per person, a total of $23 billion.


Under a federal law that went into effect in 2010, a gift card can’t expire for five years from the time it was purchased or from the last time someone added money to it. Some state laws require an even longer period. In New York, for instance, any gift card purchased after Dec. 10, 2022, can’t expire for nine years.


What happens to the money when a gift card goes unused? It depends on the state where the retailer is incorporated.


In at least 19 states — including Delaware, where many big companies are incorporated — retailers must work with state unclaimed property programs to return money from unspent gift cards to consumers. Money that isn’t recovered by individual consumers is spent on public service initiatives; in the states’ view, it shouldn’t go to companies because they haven’t provided a service to earn it. 


This article was provided by The Associated Press.


Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

  • Why do you think some people choose to give gift cards as presents? Would you personally appreciate receiving gift cards on special occasions? Why or why not? Discuss.
  • Have you ever considered giving gift cards as presents? Why or why not? Is it common for people in your country to give gift cards as presents? What makes you say so? Discuss.

Discussion B

  • In at least 19 states, retailers must collaborate with state unclaimed property programs to return money from unspent gift cards to consumers. Do you believe retailers should be obligated to make such an effort? Why or why not? Discuss.
  • Do you think it’s fair that the gift cards have expiration dates or inactivity fees? Why or why not? What changes would you suggest in the rules for gift cards to make them fairer and more transparent for consumers (ex. uniform regulations, mandatory donation option)? Discuss.