Fun Fact: People Aren't Using Gift Cards!

It's Like Printing Money

Gift cards are probably one of the most popular holiday and birthday gifts. It seems like you can buy gift cards for any company out there and for almost any amounts. Some even have pre-paid cards where you can determine the amount put on the card. Sure people are buying these cards up, but if a $20 gift card costs you $20 to buy it, where are the companies making money? Why do companies and businesses love gift cards so much? They love gift cards because it is a pretty safe bet to assume people wont use them.

Personal Perspective

I must confess, this past holiday season I received a few gift cards totaling about $30 that I have yet to use. There is no particular excuse, just simply haven't gone shopping I guess. So right now those companies are sitting on a total profit of nearly $30 just off of myself. You could do a little experiment and ask friends or family if they have spent their gift cards and also check yourself. See how many companies are profiting off them. Obviously there are ways they make profit regardless but nothing says "wasted money" quite like an unused gift card. It hurts the person who gave the gift as well as the receiver. Not only did your friend just waste $20 on that gift card to that store that isn't around you, but you just lost $20 you could've potentially used. There are even some companies that will buy your gift cards before they expire. Now you really don't have an excuse not to use the cards in some way.

Grand Scheme of Things

So now we can talk a little bigger picture. A peak year in unused gift cards was 2007. This year granted, get ready to cry, $3.5 billion in unused, sitting in a drawer, "Thanks grandma but I don't shop there," gift cards. $3.5 billion just wasted. What would you do with that amount of money? Granted you'd have in gift cards but still. So what does that mean longer term? Well the Wall Street Journal has an awesome article informing us about the average gift card amounts that went unused from 2005-2011. Spoiler Alert, it is topping out at about $41 billion. In a span of six years we have essentially wasted over $40 billion. Companies love it, and this is probably why they are so aggressive with selling gift cards. They're simple, to the point, and could profit them billions.

Where does all of this revenue go? I mean a card is still a card and can't really claimed can it? Yes it can, and yes it will be. Most cases result in the companies reclaiming the lost cards value, as many cards have expiration dates. Some times the state can even claim the revenue pending on where the gift cards were purchased. New York and New Jersey are particularly set up for success in this situation. New York in 2008, a year after the peak year, claimed between $9.5-$9.7 million. So because some people didn't spend money that was rightfully theirs, New York just made bank. USA Today also had an article about spending gift cards and the state of New Jersey, check it out for some additional info.

Please do yourself a favor and stop letting those gift cards collect dust than the states and companies collecting your money. Go spend them!

That's your daily brain gain!