Who is Responsible for Gift Card Waste?

By Shelley Hunter, Consumer Guide to Gift Cards

I’ll never forget the way my mom yelled at me for being wasteful when I threw away a box of pennies. In my defense, the box also contained stray paper clips, old receipts, staples, peeled-off price tags, tiny scraps of wrapping paper, half-eaten Christmas candies from months earlier and other tiny items I didn’t want to pick through to separate the trash from the treasure. As a teenager who just wanted to quickly finish my chores, I tossed the box—pennies and all.

In my mom’s defense, she found the pennies in the trash on a day when the stress of having more bills to pay than money to do so had been building up.

I’ve been sensitive to waste ever since.

When I read the results of a recent Bankrate survey1 stating that “Americans are sitting on $15 billion in unused gift cards and credits,” my mind went immediately to that box. Instead of hearing the crescendo of metal as those pennies, staples and paperclips slid across the cardboard on a downward slope, however, I pictured gift-givers spending money on gift cards that would be similarly discarded.

But it doesn’t have to be that way.

We can reduce the amount of gift card waste by helping consumers pick the best gift cards for every occasion and use the full value of the gift cards they already have.

Here are my suggestions for merchants and gift card issuers:

1. Clearly Communicate Restrictions Before Purchase.

I regularly field gift card questions and complaints from consumers on my blog (Gift Card Girlfriend). By far, the most frequent concerns revolve around people not being able to use their gift cards as expected. Frustrations range from being unable to check the balance of a gift card online or being barred from using a gift card immediately after purchase to prohibiting the use of gift cards in stores or on international websites. While security issues or technical challenges may drive gift card restrictions, consumer perception is that businesses intentionally make it hard to use gift cards in order to “steal” money from consumers. Restrictions on purchases, balance check, and redemption should be clearly communicated before checkout so consumers can make informed selections.

2. Encourage Consumers to Use Their Gift Cards.

Since statistics2 show that consumers who shop with gift cards almost always overspend the value of their gift cards, the benefits of usage can far outweigh potential breakage. In addition to attracting new customers and simply moving more inventory, gift card redemption increases the potential for positive customer experiences that often turn into free word-of-mouth advertising, online testimonials, reviews and other social proof. Stores and restaurants should encourage consumers to use their gift cards via in-store signage, email reminders, online banners and incentives because all parties benefit from the exchange.

3. Store Gift Cards to Customer Accounts.

Merchants can help customers remember to use their gift cards by giving them the option to redeem a gift card directly to a customer account for later use. Amazon.com has this feature and I never worry that I’ll forget to use an Amazon gift card because I redeem gift cards to my account and am later prompted to use the credit balance each time I check out. All merchants can add this functionality to their websites, and I see no reason it can’t be enabled at brick-and-mortar locations as well. If a store’s payment processing system can scan my app for loyalty points, it should be able to complete a transaction with a stored gift card credit on my account as well.

4. Allow Partial Payment Online.

Though many merchant websites allow customers to check out with multiple store gift cards, few (if any) allow partial payment with bank-issued gift cards. Not being able to redeem a Visa or Mastercard gift card on a website is particularly frustrating when the gift card must be used online. As a result, consumers feel stuck with gift cards they can’t use and frustrated by websites that make gift card redemption harder than it needs to be. Merchants should ensure their gift cards can be used in stores and online plus make it easy for customers to use bank-issued gift cards in both places as well.

With all that said, I don’t believe merchants and gift card issuers are the only ones to blame for the staggering number of unused gift cards.

Here are my suggestions for gift card givers and receivers:

1. Give Flexible Gift Cards.

Before buying a gift card, consumers should take the time to ensure there are redemption locations near the recipient or that online use is an option. When in doubt, givers should pick gift cards that can be used at more than one merchant, such as a bank-issued gift card or a multi-store gift card that is usable at any of the stores and restaurants listed on the card. (As consumers increasingly look for this flexibility, merchants should seek opportunities to participate in multi-store gift card programs as well.)

2. Use Gift Cards Immediately.

A reporter recently asked me to comment on a story about a food prep company that went out of business, leaving gift card holders with gift cards they couldn’t use. One woman who had been given a $500 gift card from people in her community, complained that the business squandered money her friends and family members donated to provide meals for her during a time of illness. Upon further inquiry, however, I discovered she had received the gift card three years earlier but never used it. Not even once. While I do believe merchants can and should do more to help consumers use their gift cards, consumers also need to take responsibility and use their gift cards as soon as possible.

3. Use the Full Amount of Gift Cards.

One of my most popular blog posts answers the question, “How do I use the small amount left on a gift card?” There are many ways, but wouldn’t it be easier to just use the full amount of the gift card in the first place? I’m not suggesting wasting money. (Never!) But before completing a transaction, consumers should check the balance of their gift cards and look for meaningful ways to hit their limits or go a tad over. I’d love to see cashiers offer friendly advice here as well. (“Do you want to buy something small to use the balance of this gift card while you’re here?”)

4. Repurpose Unwanted Gift Cards.

I believe recipients know quickly if a gift card they receive isn’t a fit but hang on to them thinking they might change their minds. That’s how so many gift cards end up being a Bankrate gift card statistic. Since gift cards generally can’t be returned and it is increasingly difficult to safely sell gift cards for cash, consumers should repurpose their gift cards right away. Some suggestions for tidying up gift cards include using gift cards to buy gifts for other people, using gift cards to buy items to donate, donating the gift cards to local charities, or regifting the gift cards to people who might use them. In the words of Marie Kondo, “Say thank you and say goodbye.”

In addition to reducing waste, the reason I care so deeply about helping people improve their gift card giving and receiving habits is because gift cards are meant to be gifts. Each is given as a placeholder for a relaxing dinner, a new outfit, a pair of basketball shoes, theater tickets, a tank of gas, a first pair of pierced earrings, airfare to come meet your grandson, an ice cream cone dipped in sprinkles and millions of other treats, both big and small. But none of those experiences happen if gift cards get tossed into the trash like a thoughtless teenager in a hurry to clean her room. And that, to me, is the real waste.

1 Bankrate Survey: https://www.bankrate.com/finance/credit-cards/gift-cards-survey

2 Blackhawk Network reported in 2018 that “59% of consumers surveyed usually spend more than the card’s value.” (https://blackhawknetwork.com/blackhawk-consumer-gc-preferences-interactive-infog/)

First Data’s 2018 Prepaid Consumer Insights Study found that the average consumer is spending $59 more than the original value of their gift card, marking an increase from $21 a year ago. (https://www.pymnts.com/news/retail/2018/consumer-spending-gift-cards-holiday-shopping/)