Did Your Gift Card Expire? Know the Law & How to Make the Most of Them

“This gift card has expired. Sorry.”

Don’t you hate hearing those words?

I had that happen to me this morning when I was taking my favorite three girls (wife and two daughters) to Einsteins for a bagel.

We were partly lured to Einsteins because of a $5 off gift card we had. A family member had given us this card as a gift.

We made our selections and went to the register to pay. We hadn’t noticed, but the gift card had expired last month. The cashier kindly rejected our gift card, we paid, and ate our bagels.

It was a great morning otherwise. But I couldn’t help reflect on the negative experience with the gift card. Two things bother me about the expiring gift card:

How Expired Gift Cards Affect Customers

1. The consumer isn’t rewarded for being “incentivized”. We went to the store partly because we thought we were going to save money with the gift card. We didn’t notice the fine print of the expiration date. Our fault, totally.

However, shouldn’t a business be more interested in creating a satisfying customer experience? We’re coming in, with our hard earned cash to spend on their business. They treat us like we lost. “Oops. Sorry. You fail.” Well, I say the restaurant failed, as I’ll be less likely to deal with them in the future.

2. The gift giver isn’t rewarded for their spending. In this case, I believe the $5 card was a promotional “add-on” gift card attached to a purchase of a $20 gift card. You’ve seen the offers: buy a gift card for someone else, and get this bonus card for yourself.

If the giver meant to give us the card and for us to experience a money-saving meal, then she’d be sorely disappointed to find out that it was worth $0 for us. She essentially gave us something of $0 value. Einstein’s took away her ability to give.

Maybe I’m being a bit dramatic there, but you get the point: the consumer is given a reason to dislike the company they were trying to support.

Do Expired Gift Cards Help Business?

I don’t know much about corporate finance or marketing budgets, but what purpose does an expiration date serve for this company? How many people actually bring a gift card in after expiration? Maybe 5% of those with cards?

I would bet that 75% of gift card recipients use it before expiration, and another 5% try to use it after. The other 20% never think about it, lose it, or for whatever reason never get around to using it. So this company is risking a negative customer experience so they can save on the cost of 5% of their gift card budget? Doesn’t make sense to me.

Gift Card Expiration Laws to the Rescue

With the signing of the CARD Act, the laws around gift cards changed. This regulation regarding gift cards actually came into effect years ago. They affected expiration date and fees associated with gift cards. The main provisions of the law:

  • Gift cards can have an expiration date, but it can’t be sooner than 5 years.
  • Inactivity fees and other service charges can only be applied to cards older than 1 year.
  • The law covers gift certificates, store gift cards, and general-use prepaid cards.

The card we received (in the story above) was obviously given out prior to this coming into effect. It will be interesting to see how retailers and banks treat gift cards in the coming months and years. I suspect that they and their customers will be a lot happier.

Make the Most of Your Gift Cards

The holiday shopping season is upon us. Many consumers will be heading out stores soon to find the best deals on stuff they want or stuff they want to give others. “Stuff” has its place in this gift-giving season, but gift cards are actually one of my favorites items to give and to receive for most situations.

I like gift cards because they’re a consumable gift and they take some of the hassle out of shopping. Gift cards aren’t without their downside though. Some people aren’t a fan of them, calling them restrictive and impersonal.

Whether you love them and give them out, or hate them but still get a few, here are a few tips for making the most of your gift cards this holiday season:

Giving Gift Cards

If you’re the type that loves to give out gift cards, check out these tips:

Choosing Between Generic Card or Store Brand Cards

There are two basic categories when it comes to gift cards. Those that are basically like a prepaid credit card (generic), and store-specific cards.

What type you get depends on the type of person you’re buying it for. Teenagers – sometimes the hardest to shop for – are also the ones who would be most likely to want a generic gift card or even just cash.

Any other person and you run the risk of seeming too impersonal. So, if you go generic, make sure it’s for a teenager.

For most everyone else, a store-specific card would be appropriate. Do your best to match the store with what you know about the person.

  • If they’re a reader, give them an Amazon.com or bookstore gift card.
  • If they like sports, consider a gift card to a sports apparel store, or to a ticketing website, where they can find tickets to all types of sporting events.
  • Gift cards for consumable experiences (movies, restaurants, events) are always best in my opinion. I love gifts that don’t clutter up someone’s house.

However, please be careful what store you purchase your gift card for. Stores that go out of business or go bankrupt might not honor the card after a certain point. So aim for cards from stable companies.

Also, it’s important to note that some generic gift cards often come with fees. Stay away from these types.

Don’t Buy Gift Cards for These People

Unless they ask for it, I wouldn’t suggest getting a gift card for your significant other. This is the one person in the world that you should know exactly what to get and not resort to a card.

Additionally, you wouldn’t want to get young kids a gift card either. Kids enjoy unwrapping actual gifts. Lastly, people who don’t go online or out that much wouldn’t have much use for a gift card either.

Use a Gift Card to Inspire

Gift cards can be used to inspire a person into certain actions that you or they desire. For instance, if you know someone who never takes the time to treat themselves, consider giving them a gift card to a spa or ice cream shop.

Know someone who talks about learning a musical instrument or being more physically active? You can get gift cards for music lessons or sports/active programs.

Look for Kickbacks

Some gift cards come with an incentive for the person doing the giving. Last year I bought a $25 restaurant gift card and received my own $10 card for free. It was for a place that I frequent, so I felt like it would be put to good use.

You might consider this even if you aren’t giving the card away.

Receiving Gift Cards

If you receive a gift card this year, keep these points in mind:

What to do with Gift Cards You Don’t Want

Let’s say you get a gift card that you didn’t really want. For instance, you’re not a coffee drinker and you get a gift card from Starbucks. What a waste, right? Well consider these options:

  • Re-gift the card to someone you know is a coffee drinker.
  • Browse the various gifts, music, and food at your nearest Starbucks. There may be something besides coffee that you’ll like.
  • Use one of the websites that will allow you to trade for a different card or send you a check for your unused gift cards.

Use Them or Lose Them

Unfortunately, some gift cards come with expiration dates or fees that kick in after a year. So make it a point to place all your gift cards in a highly visible spot (and even add them to your calendar) so that you’re sure not to forget about them and let them expire.

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon. He created this website back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence. He uses Personal Capital to track his wealth. All the content on this blog is original and created or edited by PT.

Comments

  1. SB (One Cent At A Time) says

    lot I have learn from this post. I have a card from B&N, two years old, I thought its expired. Now I can use it

  2. Jenna, Adaptu Community Manager says

    I had a similar experience earlier this week with a Groupon. The deal expired and the company was closed on that day! I called and left a voicemail but still haven’t heard a response. Definitely not going to get my business in the future.

  3. michael lee says

    If you let a gift card expire that most likely means the gift card was for a store selling stuff that you really didnt need all that much. I can’t remeber off the top of my head, but I have seen a TV commercial for a company where you can redeem your unused gift cards for cash. Anyone know what I’m talking about?

  4. 20 and Engaged says

    I hate that feeling. I usually get gift cards for places I rarely go so I have to go out of my way to go spend it. By the time I’m ready to use it, it’s not valid anymore 🙁

  5. Tracy at QuickQuote says

    I am super paranoid about this, I always use gift cards within a week of getting them.

  6. cashflowmantra says

    It is a terrible feeling to know that you let a gift card expire. I have done this. I feel bad for myself and the giver of the gift. It would be nice if they never expired.