New Laws Mean Unused Gift Card Money Won't Be a Gift to Stores
Gift cards have made holiday shopping a whole lot easier for millions of people. But they also raise a big question: Who should profit when people don't use up their gift card balances?
Until recently, if you didn't use your gift cards, the companies that issued them won. For years, companies like Best Buy (BBY) and Home Depot (HD) have reaped big gains from gift cards they expect won't get used.
But a new trend has changed the playing field. Several state governments have passed laws subjecting gift cards to the same rules that cover unclaimed bank accounts and other property -- and the huge amounts of cash they've grabbed up in the process have helped them manage financial woes and budget shortfalls.
Gift-card providers argue that the laws impose an unfair burden on them, as they have to collect information that they haven't had cause to gather in the past. In response to a New Jersey law, American Express (AXP) has said that it plans to stop selling cards in the state rather than have to comply with the law.
The Better Solution
Theoretically, having the state collect unused gift-card balances is arguably better for consumers than having card issuers keep the money. With procedures in place for you to collect unclaimed property from the state, you could get your lost gift-card money back.
The better solution, though, is never to let your gift card go to waste in the first place. That's easy if you like the store: Just use up the money on the card quickly.
But what if you know you'll never spend the money? A number of websites have sprouted up to handle that problem by letting you sell gift cards for cash. Plastic Jungle, Cardpool, and GiftCardRescue are just a few of the companies that will buy gift cards from you. You won't get the full cash value of the card -- but with payouts typically ranging from 70% to 95% or more, you get a nice payoff in exchange for something you never would have used.
In the end, controversy about unused gift cards doesn't have to affect you at all. Let state governments and card issuers duke it out over unused gift cards, and just make sure you get your money's worth from the cards you receive.
Motley Fool contributor Dan Caplinger never met a gift card he didn't like. You can follow him on Twitter here. He doesn't own shares of the companies mentioned. The Motley Fool owns shares of Best Buy. Motley Fool newsletter services have recommended buying shares of Home Depot and writing a covered strangle position in American Express.