Why Are Americans Letting Billions of Dollars Worth of Gift Cards Go to Waste?
Americans are letting billions of dollars worth of gift cards go to waste. Time is money, and for American gift card holders, time is ticking! Gift cards are a popular choice for consumers for gifting and loyalty programs, but Americans are hoarding their gift cards instead of redeeming them. According to a report by Credit Summit, two-thirds of American consumers have at least one giftcard that is left unused. In addition, the report they released goes to show that there is around about a staggering $21 billion tied up in unused and lost gift cards. The respondents unanimously said their unredeemed cards were worth $200 or less. Another study on gift card usage showed that the average amount of unused gift cards last year was $175 per person; which was up from $116 in 2021. But the real question is: why are Americans letting billions of dollars worth of gift cards go to waste?
Ted Rossman, a senior industry analyst with CreditCards.com and Bankrate.com says “inertia” is a big factor in why people don’t use their gift cards. He explains that sometimes the gift card is for a store that people don’t particularly like or it’s not convenient to go there. However, ignoring the gift of free money is unwise, Rossman said. It’s important to note that they’re not going to get more valuable over time – not disregarding the fact that inflation eats away at their value.
Companies need to find ways to prevent consumers from letting gift cards go to waste. How to go about this scenario and what strategies can be used to take the edge off this problem?
Incentivizing gift card redemption could be an effective way to prevent waste. Retailers, for instance, could adopt a strategy of offering a discount or bonus points to customers who redeem their gift cards within a certain time frame. Another scheme could be to allow consumers to exchange their gift cards for cash at a discounted rate.
Jay Jaffin, CMO of Blackhawk Network, believes that offering a variety of redemption options could help solve the issue of wasted gift cards. Here’s more of what he says.
“Gift card usage is unique to each individual. Blackhawk Network’s research shows that there’s usually three primary reasons why shoppers hold onto their gift cards. First is they just haven’t found that perfect item that they feel justifies the purchase. The second is they may be saving for a larger purchase, so either accumulating gift cards or saving up a little bit on the side, and planning to use that in conjunction with the gift card.
And then the third is they’re spreading their spending for more effective budgeting. So I’m just gonna spend a little bit on this gift card every couple of weeks. And for a lot of folks, that really helps them in their budget process.
Now there are a few key things to keep in mind when you send or receive a gift card, and some of these can really help lessen the sting of inflation. The first thing I’d say is consider your immediate needs. Sometimes the right approach is just to spend a gift card on the things I need day in, day out, and that could really give you some good budget cushion.
The second is you can stretch out the value for your gift cards by combining them with deals and promotions. Again, Blackhawk Network research shows that 40% of consumers say that they’re buying more products on promotion today than they had in the past. Similarly, we see about 33% of folks say they’re using more coupons.
So this is a great way to make those gift cards go further. Third thing I’d say is when buying a gift card for someone else, consider multi-brand gift cards. Like One4All. These are cards that either combine a bunch of brands onto one, typically with no fee, or they may be thematic. And I love those thematic gift cards. You’ve got dining cards and spa cards and travel cards, and what I love about that is it still feels like a personalized gift because I know you’re a foodie, I’m gonna get you a dining card, but it gives you the flexibility to spend it in many different places because I’m not sure exactly where you might wanna go next Friday night.
And then lastly, I’d say if you get a gift card and you are convinced you’re never gonna use it, pay it forward. I have never heard anyone complain about a re-gifted gift card.”
Article written by Azam Saghir.
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