The holiday season is upon us and with that comes time for gift-giving. Gift cards are popular gift ideas and can be an easy way to check someone off your list. But to be honest, I am not a big fan.
The main problem I have with gift cards is that the value is locked into the gift card and you have to spend to release its value. It is estimated that consumers will spend upwards of 29 billion dollars on gift cards this year. That’s a lot of money locked into plastic!
I have a lot of gift cards floating around. I actually keep track of them in my net worth spreadsheet. Looks like I currently have over $350 of plastic money sitting around. They are technically assets, so they can be counted as part of my net worth, but more importantly, I track them so I don’t forget about them!
I have a habit of holding onto gift cards for extended periods of time, to the point where I don’t even remember where they are from. Often times, they are for places where I don’t shop very often. The store is far away and I’m never on that end of town or I just don’t shop there anymore. So I need to keep track of them all.
Some gift cards incur fees if they remain inactive for a certain length of time. One more level of tracking required! And how is that even allowed? My brother had purchased a gift card for me for my birthday for the mall, and after 12 months of inactivity they start charging me a monthly $2.50 administration fee. How is that fair?! My brother paid full price for the gift card, in cash. He was basically pre-paying a purchase for me and now they want my balance to drain if I don’t use it? Baaah
If you want to use the value of the gift card, you are almost guaranteed to have to spend more than what is on the card. Rarely do purchases come to a nice round number after taxes, so if you have a $30 gift card you will probably need to spend at least $35-$40 to use it up, leaving you with an extra $5-$10 to pay out-of-pocket. This is fine if it was a purchase you had already planned on making, but when it’s a place where you wouldn’t normally shop, your gift ends up costing you money out-of-pocket.
61% of gift card holders spend more than the amount of their gift card, and 75% of those who overspend spend 60% more than the value of their card.
The worst is when someone offers you a gift card to a restaurant or store where the gift card amount would never cover anything available. So while gifting the $10 gift card to the Keg Steakhouse is a nice thought, you are basically encouraging your friend to drop another $50 in order to have a meal there for two. I certainly understand why businesses love the idea of gift cards!
So what can you do to unlock the value of your gift cards? How can you avoid spending the added dollars in order to redeem the gift?
One option is to regift the card to someone else. If this person is going to shop at the retailer anyways, then you are giving them something of value and maybe saving yourself some money by not having to spend on a gift for them. But if you gift it to someone who’s in the same situation as you, then you are just passing along the problem to the recipient. What kind of gift is that?!
If you donate your gift card to a charity, you can help them out while writing it off as a tax deduction. Just make sure they can actually use the gift card. You can also donate it to a silent auction fundraiser, where it will be raffled off with other items to a lucky recipient.
Another option is to sell the gift card for cash. If you know someone who would use it, offer it to them at a discount price. Or, sell your gift card online. There are sites that will pay you a discount price for your gift cards, and then resell them at a slightly higher cost. Try some of the following sites:
I decided to try out one of these sites for myself, to see how it works. I went with CardSwap.ca since they are Canadian and I my gift cards are all in Canadian funds. I sent them two gift cards: one from American Eagle Outfitters and one from Garage Clothing. Both these gift cards were prizes I received online from entering contests or responding to surveys, so no one is going to be offended that I sold their gift. I also don’t shop at these stores and only go in expressly to try to off-load these cards on something I actually want. But I think I had been holding on to them for 2+ years by now.
I originally had just over $32 on each of the two cards, for a value of about $64. Cardswap gave me a quote for $42.79, including free shipping of my gift cards to them. The other option is to get Cardswap points that can be redeemed towards other gift cards, and they give you a slightly better offer. But then I’m still stuck in the same situation and haven’t unlocked the value of my cards.
Reluctantly giving up about a third of my gift card value, I sent them in. Within a couple of weeks, I received a cheque in the mail for $42.68. Value Unlocked!*
What do you do with your gift cards? How do you keep track of them? Have you ever used one of these sites to buy or sell a gift card?
*And promptly spent $42.56 on two workouts tops from Lululemon (they were on Clearance!).