Never look a gift card in the mouth…

20th April 2012  

It appears that there are millions of pounds worth of gifts going unclaimed, according to a recent report by the BBC’s respected Moneybox program. Store and credit card gift cards are often seen as an ‘easy option’ for those last minute presents or when you simply don’t know what to get Aunt Nora for her birthday.

Annual sales of the cards are worth more than £4billion in the UK, with just under half used as personal gifts and the rest given as business treats or bonuses for a job well done. But approximately £250million of cash donated on these these cards is going unused every year, a wastage figure of 6%. The problem seems to be the short expiry date on many cards. After the initial giving process they get shoved in a drawer and forgotten about until being re-discovered – quite literally ‘a day late and a dollar short’.

Andrew Johnson, director general of the UK Gift Card and Voucher Association explained that for retailers, gift cards and vouchers are a liability on the financial books of many organisations. So it makes good financial sense to remove that liability at some point, hence the short expiry dates. However, many shops do extend expiry dates on gift cards every time they are used, to try and encourage foot-fall into their establishments.

Business bonuses

In 2011, £2billion worth of gift cards were sold in retail stores, but the larger share (£2.1billion) was bought by businesses to give to staff as rewards or as part of a promotion campaign. The problem is that, like any other form of moneyless transaction, there is some small print to take into consideration. In the case of gift cards, the small print usually includes an expiry date of 12 months after the initial purchase or two years after the card was last used.

A fair chunk of that unclaimed £250million is taken up with unused ‘change’ on the card. For example, if a £20 gift card is used to purchase an item for £17.99, it will leave £2.01 on the card. These small amounts are often disregarded by the recipients of the card but, just like interest charges on credit cards, over the year and across the gift card spectrum they add up to a colossal amount of money.

Bringing in the customers

Gift cards are favoured by high street retailers (who are having a particularly hard time of things lately) because they encourage people who might not normally visit their establishment to cross the threshold into their store. Once inside, it is estimated that customers who spend a gift card in store will go on to spend a further 40% of the value in hard cash as well. But going into a store only to find that the gift card has expired is a sure-fire way to discourage them from making any kind of purchase at all.

So how can you make the most of your gift card? Well, the simple advice, as with anything, is to check the small print and, if there is no information on the expiry date of the card, contact the retailer direct and ask or you could be short changed!

Enjoyed this Post?

Subscribe to our daily post, Follow us on Twitter, Join us on Facebook

Follow us on TwitterJoin us on Facebook
Recommend this post

Simply give this post a vote on Google+, Facebook or Twitter to tell your friends

Follow us on FacebookFollow us on TwitterSubcribe to Compare credit cards feed
Subcribe to Cardchoices email alert