If you’re looking for a way to raise cash for the holidays, dig through your dresser, search the kitchen junk drawer or rustle through that pile of old papers on your desk. Chances are you’ve got at least one unused gift card stuck away that you can use to buy gifts, convert to cash or simply give away as a present.
So do a lot of people. For the past few years, about $1 billion in gift cards have gone unused. More than $29 billion was left on dormant cards between 2007 and 2015, according to data from CEB Tower Group. This so-called “gift-card spillage” has declined from $8.2 billion in 2007 to a rate of about $1 billion a year now because of consumer protections passed as part of the 2009 Credit CARD Act, which limits what card issuers can do with unused cards.
Just spend it
The first thing you can do with an unused card is obvious: Go and use it. Just because you didn’t get around to spending that $50 Bed, Bath and Beyond gift card right after Christmas 2011 doesn’t mean you can’t use it now, either for yourself or to buy a gift for someone else. If it’s been less than a year, your card should be worth the full value – issuers can’t hit you with inactivity fees unless the card has gone unused for more than 12 months, and some state laws extend that time limit. This only applies to retail cards. Reloadable cards not marketed as gift cards, promotional and rewards cards, and phone cards are exempt.
After the inactivity period begins, card issuers can’t charge more than one fee per month. Expiration dates and terms should be listed on the card or you can check the website listed on the card or the card issuer’s site. When you get a gift card, it’s best to note the inactivity period and terms and make a point of using the card during that time. Make a note in your calendar. A typical inactivity fee is $2 per month so a $50 gift card is nearly worthless after more than three years.
If your card is expired
The value of the card itself can’t expire for five years. And even if you’ve passed that limit, it doesn’t mean your card is worthless. Most (but not all) store-branded cards never expire and don’t charge inactivity or dormancy fees. If your card has expired, call or visit the retailer and ask if you can be credited with the full value of the card or, at least, the value of the card minus fees (if any balance would have remained).
If your gift card’s validation period has passed, but it was less than five years, federal law says you should get a replacement card at no cost. This is why most cards indicate a valid period of five years. If your card is lost or stolen, you can be charged a fee for a replacement.
Again, state laws can vary on this. For example, in California single-store gift cards aren’t allowed to ever expire or charge fees (but not multi-retailer cards, such as one issued by a mall, or to bank-issued cards, such as MasterCard, Visa or Discover). You can find a list of state laws here and here.
If your card has expired, the merchant doesn’t automatically get the money. Merchants can treat the unused balance as income once they’re sure it’s unlikely to be redeemed, but many states claim that money just as they do with cash in abandoned bank accounts in a legal process called “escheat.” Texas and New York hold unspent gift card balances through their unclaimed property offices, for example, but California doesn’t.
Consumers can reclaim this money by filing a request and proving ownership, whether it’s from an unused gift card or a forgotten utility deposit. You can search at MissingMoney, a Website endorsed by the National Association of Unclaimed Property Administrators containing the records from most state unclaimed property programs. The association also provides links to every state unclaimed property program website where you can search and check claiming rules.
Resell your card
Another option is to resell your card. This can be to someone you know, such as a caffeine-addicted coworker who’ll take your Starbucks gift card, or to a wider market through one of several gift-card reselling services on the web. Some sites will pay as much as 92 percent of the card’s face value but, since they also offer cards for sale at discounts of as much as 35 percent, expect to take some kind of cut to your card’s value. Some gift card buyers also have self-serve kiosks where you can exchange or cash in a card. You can find details and locations here.
Some of the more prominent online exchanges include:
Cash it in
If you’ve got a gift card from a credit card network, such as Visa, MasterCard, American Express or Discover, simply activate the card and register it with one of the virtual wallet services online. That includes Square, Google Pay, and Apple Pay. Then link that account to your bank account and transfer yourself the cash.
Typically, there’s a service fee of about 3 percent and you’ll get the cash in one or two business days. Once it hits your bank account, you’re free to use the money in any way you like. This strategy won’t work with retailer cards, reward cards and promotional cards, unless they’re branded with one of the major credit card networks.
Brian J. O’Connor is the author of the award-winning budgeting book, “The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese.”
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