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January 04, 2022

When gift cards go bad

Find a few gift cards under the tree this Christmas? Too bad, the odds say that they’re about to end up in your sock drawer.

As much as $5-billion of the money that well-meaning givers have put onto gift cards will likely go to waste, according to TowerGroup in Massachusetts, who estimate that as much as 12% of gift card value is never spent.

The money, known as breakage in the industry, then reverts back mostly to the retailers and that loaded the plastic initially – a major reason that stores push gift cards with such enthusiasm.

Whether you’re giving or receiving, here are a few cautionary tips from Consumer Reports and other consumer advocates: 

Keep it safe. As soon as you get a gift card, put it in a safe place, say, a file folder reserved just for gift cards.

Register it. Some cards must be registered with the issuer, especially if the card is used for purchases online or by phone.

Check it out. Consider buying cards only from issuers that allow you to check your balances online or by phone.

Swap it. Don't like that particular store? Then get together with friends and swap cards online here or here

Spend it quickly. Use the card as soon as possible, especially if it expires or has a monthly maintenance fee.

Use it all. If the card balance gets so low that there’s nothing to buy, ask a merchant to do a split-tender transaction. That involves using the remaining card balance for part of the transaction and another form of payment for the rest.

Hold on to it. Don’t throw out the card when the balance is zero. Some merchants require it for returns.

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...