Got a Gift Card From a Troubled Retailer? Use It Now
Customers with gift cards are, legally speaking, unsecured creditors, says Odysseas Papadimitriou, founder and CEO of gift card exchange CardHub.com. This means they're unlikely to get back anything if a chain goes into bankruptcy and liquidates, since secured creditors get first crack at any assets (and they generally wind up losing money as it is). If you happen to hear about a retailer going through financial distress, it's a good time to cash in that gift card, unless you want to think of it as a novel tool to scrape any late-season frost off your windshield. If it's a card from a store you never patronize and can't really use, buy something and either try to unload it on eBay or Craigslist, or give it as a gift. (If you're gifting, though, be really sure the person will like the item, since they might not be able to return it if the brand goes belly-up.)Avoid digging through your drawers for long-neglected gift cards in the first place by following Papadimitriou's gift card advice: "My rule of thumb is the following: Am I going to use this card in the next 12 months? Is this a store I go to anyway?" he says.
"If the answer is yes, I keep it in my wallet, not in a drawer." Having the card at your fingertips means it's more likely to jog your memory when you're out shopping. "If the answer is no, don't trick yourself into saying you'll use it," he adds. After all, the store already has the money, so you might as well get something out of it. Papadimitriou suggests selling an unwanted gift card on an exchange like CardHub, where you can trade an unwanted card for one you'll actually use. We've written about gift card exchanges, how they work and what you can expect, here.