4 Reasons Not to Wait to Use Your Gift Cards

It's official: If you've got a Borders gift card that you didn't use before the bookseller went out of business, now it's a useless chunk of plastic.

On Wednesday, U.S. District Judge Andrew Carter upheld a lower court ruling that said that holders of 17.7 million Borders gift cards are not eligible to be compensated for their unused balances.

While only a fraction of those millions of gift cards would likely have been redeemed, this is bound to disappoint consumers who discovered unused cards after Borders went under. But it's also a valuable reminder that you shouldn't hoard your gift cards. Here a few reasons to use them right away.

The company might go under. That's what happened with Borders, and it was also true of Sharper Image. In the latter case, a class action suit was able to compel the company to compensate cardholders for their unused balances. But as Borders proved this week, that's not always going to be the case.

You don't have to worry so much about established companies -- Walmart's not going anywhere, for instance. But if a retailer starts closing locations, it might be a heads-up that you should spend your gift cards while you still can.

It might expire. This is less of a concern than it was a few years ago: In 2010, the CARD Act ruled that all gift cards must have an expiration date at least five years in the future. So you don't need to rush out right away to use it if there's nothing in the store you want to buy. Still, if you stick it in a drawer or in the back of a wallet for a year, chances are pretty good that you'll completely forget it exists.

It will depreciate in value. While doing some spring cleaning the other day, I discovered a Barnes and Noble gift card that had been given to me way back in 2004. On a whim I decided to check the balance online, and was shocked to discover that it still had a value of $30.

But enough time has elapsed that my $30 doesn't buy as much as it used to. A quick look at an inflation calculator reveals that what cost $30 in 2004 costs $36.07 today, so I effectively lost money by letting it sit unopened for nearly a decade. Sure, the interest rate on a basic savings account isn't keeping pace with inflation either, but a gift card won't earn interest at all.

You can get rid of it. If you don't think you're going to use your card right away -- or at all -- consider getting rid of it. One option is to simply regift it to someone who you think will get more use out of it. The other is to visit one of these gift-card exchanges, which will allow you to sell it for cash or trade it for another card more to your liking. (Just note that one of the sites on that list, PlasticJungle, stopped buying and selling gift cards earlier this month.)

So if you get a gift card for your birthday, use it right away or find a way to unload it. But don't do what I did and stick it in your sock drawer for several years.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.