Dear Dr. Per Cap

I got a bunch of gift cards for Christmas.  Some are for stores I don’t shop.  What’s the best way to exchange them?

Signed,

Too Many Cards

Dear Too Many Cards

With so many people social distancing and staying away from stores, purchases of gift cards were way up this past holiday.  Plastic or electronic, many people are stuck with gift cards they won’t use.

Fortunately, there are options for unloading unwanted gift cards.  A first step is to check out online gift card exchanges.  Spoiler alert – there are a ton of them so do your homework. 

Most exchanges are third party businesses that take a cut for connecting people looking to buy, trade, or sell gift cards.  Pay close attention to fees and red tape.  Some stores have kiosks where you can exchange gift cards too.  Either way check reviews to make sure you’re dealing with a reputable exchange that doesn’t charge more than 15% of a card’s value to take it off your hands.

Also, steer clear of consumer-to-consumer platforms like eBay and Craigslist.  Both are loaded with gift card listings where buyers and sellers can deal directly.  However, you face a much bigger risk of fraud so I don’t recommend them.

Interestingly, many businesses count on their gift cards to be only partially used or not at all.  In fact it’s estimated annually over $3 billion of unredeemed gift card balances end of booked as revenue by the businesses that issued them.  Gives a whole new meaning to the term “double dipping.”

Don’t let that happen.  If you find yourself with a small balance on a gift card, states such as Montana, California, Oregon, and Washington have “cash back” laws that require stores to pay a card holder for any balance under a certain amount, although it’s usually only between $5 and $10.   But even if your state doesn’t have a cash back law it doesn’t hurt to ask a store for a gift card balance refund anyway.  You might be pleasantly surprised.

Here’s another cool hack.  Amazon lets customers use small balances on competitors’ gift cards to buy their gift cards.  Since digital Amazon gift cards can be purchased in any amount, a few small gift balances applied to an Amazon account can up to a nice sum.

A final little known fact – some states will claim the balances of gift cards that have been lost or sitting around a few years.  They might try to track down consumers or list the funds as unclaimed property.  If you’re bored some evening check out https://www.classaction.org/gift-card-laws for an interactive map listing every state’s gift card fees and redemption laws.

Geez, I wonder if people that give gift cards realize how much of a hassle they can be.  I think I’ll take up knitting and give socks next Christmas instead of gift cards.

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit www.firstnations.org. To send a question to Dr. Per Cap, email askdrpercap@firstnations.org.