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

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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.