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Jeruba's avatar

Do you think businesses make much money on unused gift cards?

Asked by Jeruba (53814points) November 19th, 2021

Over the years I have forgotten or just failed to use gift cards that probably added up to a couple hundred dollars. In two cases the stores closed before I ever got to use the cards.

These were gift cards linked to specific stores and not all-purpose ones like Visa.

Do unused gift cards add up to any significant amount for retail stores? Are they a hidden asset?

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8 Answers

Dutchess_III's avatar

I’m sure they have an account just for that in their books.

Blackwater_Park's avatar

Oh yes they do! It’s free money. 3–5% never get redeemed.

kritiper's avatar

They make a bunch.
I got a gift card and they store deducted 10% for every two months it wasn’t used.
I got a $35 gift certificate (same thing) for a Red Robin restaurant and never used it.

gorillapaws's avatar

Don’t forget it’s basically 100% margin (less the cost of the plastic card). In a low-margin business, you’d have to sell many times that amount to achieve the equivalent profit. (e.g. one lost gift card in a 20% margin business is the equivalent of selling 5 of those cards worth of value).

Dutchess_III's avatar

Well.would they count it as untaxed income or a profit or what?

zenvelo's avatar

@Dutchess_III Unused gift cards are booked as. a liability because the firm must be ready to redeem them at any moment.

Gift certificates and gift cards used to expire, but the laws on that changed, so if you find an old gift card around the house, you can still spend the value. @kritiper, the store deducting while it was unused is illegal these days.

I was given a gift certificate by my sister in law for Christmas in the mid 1980s. It got put away in a box of important papers, and travelled through 5 places I lived over the course of 30 years. A couple years ago, I came across it, and made a special trip to the store in San Francisco and bought some nice clothes with it. Took a bit of time for them to verify it, but all went well, no hassles.

jca2's avatar

There was an article a few years ago online about how people in the US have millions of dollars of unused gift cards in their homes, and what profit it is for the stores.

New York state changed the law years ago so gift cards and gift certificates don’t expire. I have (or had) a little card file full of gift cards, including $100 from Bloomingdales for Ugg slippers I received that didn’t fit, that is lost in my bedroom. I also had some paper printed ones from Lord and Taylor which I can’t find. Anyway, I have more gift cards now that I am trying to be more careful with. The lesson learned (which I didn’t adhere to) is to spend the cards as soon as possible, especially with retailers going out of business now. You can’t redeem them if the place is out of business.

Blackwater_Park's avatar

It would be counted as a liability on their balance sheet and that’s probably why gift cards “age out” these days. I had a big $200 gift card for a local bike shop. I was saving it for when I really needed something and they went under during the Covid lockdown. I’m always going to use them right away now.

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