Thrifty Spending Issue 88

FEATURE ARTICLE:  Gift Cards: Use Them Before You Lose Them

Some gifts keep on giving. Others – like gift cards – can actually cost you if you don’t use them within a year. If you were given a gift card over the holidays, better read on.

The holiday presents have been unwrapped and most of us received at least one gift card. Now is the time to shop with these cards while they’re still fresh in our hands.

The National Retail Federation predicts that 80 percent of people have purchased gift cards this holiday season, and shoppers will spend an average of $43.23 per card. Total holiday spending on gift cards in 2011 will reach $27.8 billion. That number grows each year because gift cards are the easiest present to give, saving time and shopping stress for the giver.

Surprisingly, it’s also a present that often goes unused. Last year, 113 million Americans received gift cards during the holidays, but at the start of the 2011 holiday shopping season, a quarter of recipients still had an unused gift card from last year (according to Consumer Reports).

“For some reason, gift cards aren’t spent as quickly as a cash gift,” says Bill Hardekopf, CEO of “We slide them into a wallet or drop them in a drawer, lose them, or forget about them. We let that money waste away. The best time to use a gift card is soon after you receive it. Use them before you lose them.”

What happens to unused gift cards? The Securities and Exchange Commission allows companies to count unused gift-card money as income once they can reasonably say the card won’t be redeemed. However, some states require unused gift cards to go to an unclaimed-funds account. Those states can then use the unclaimed funds for general purposes until someone claims it.

Here are some consumer tips for using a gift card…

  • Use them before they expire. Merchant and bank-issued gift cards must now be good for five years, thanks to the CARD Act provisions. Reloadable cards can expire five years after the money was last added.
  • Research the fees. Some cards, like bank-issued cards, also charge fees, such as a monthly fee after 12 months of inactivity.
  • If you will not use the card, or would prefer to have the cash, you can resell the card. There are several sites, such as and, that are a marketplace to buy, sell, or exchange gift cards. You may receive as much as 80 to 90 percent back for your gift card. Some cards are worth more than others and the price can vary between sites.
  • Turn your gift card into cash for investing or saving. trades unused gift cards for cash to fund your GoalMine account. Receive 150 percent of the initial $50 of card value on your first card if you’re opening a new account, and market value for the rest.
  • Donate your gift card to charity and get a tax deduction. Many national charities and foundations, like the Kidney and Urology foundation, accept gift card donations.

MONEY SAVING TIP:  Saving on Gas.  Gas station chains often partner with other businesses, such as supermarkets, to create rewards-earning opportunities. For example, Shell has a deal with some of the nation’s biggest grocery companies, including Giant and Kroger, so that every $100 you spend at the supermarkets gets you a 10-cent-a-gallon rebate on your next fill-up. Tack that on to the 5% cash back offered by the PenFed Card and you’re looking at saving around 7.6% per gallon the next time you buy gas at a Shell station. The trick is to find savings opportunities that fit your spending habits, rather than changing where you shop or going out of your way to save.

DID YOU KNOW…about the different saving strategies for military personnel?

Even though those who stay in the military for 20 years or more can qualify for a pension, it’s still important to save on your own. In truth, few people actually stay in the military long enough to claim a pension, and, unlike civilian pensions, there’s no “partial vesting” to guarantee that workers who leave “early” get something. With the military, if you leave before 20 years, you get nothing. Even if you qualify, pension payments probably won’t be enough to cover your bills—you’re usually entitled to 50% or less of your base salary if you retire at 20 years (and more if you stay beyond two decades). See for options based on when you joined the service.

Instead of worrying about what might happen, take charge of something you can control: your own savings. The younger you are when you start setting aside funds for your future, the easier it will be to build a healthy nest egg. And while you’re in the military, there are special investing opportunities and tax breaks to help you supercharge your savings. It’s up to you to make the most of your options.

For more information check up on the government’s Thrifty Savings Plan and tax-free earnings from a Roth IRA.