If you're like 28-year-old Staci Jeffrey of Omaha and millions of other Americans, you're still sitting on a gift card or two that you received for your birthday or during the holidays.
It's one of the most requested gifts, but an estimated $2 billion in gift cards were not redeemed in 2011, according to CEB TowerGroup, a Boston-based financial research firm.
Since 2005, more than $41 billion in gift cards has gone unclaimed. And businesses — including some you might not expect — are taking advantage. United Airlines this month announced that it will trade frequent flier miles for unused gift cards from certain retailers and businesses, including Target and Starbucks.
Other businesses have set up systems to allow consumers to swap or cash in gift cards, sometimes at a steep discount.
The businesses' interest is not surprising, considering that gift card sales topped $100 billion in 2011, according to TowerGroup. The National Retail Federation estimated that consumers spent $27.8 billion on gift cards during the past holiday season, up from an estimated $24.78 billion in 2010.
Gift card spending has increased by an average of 6 percent a year since 2005, and it's expected to continue at that rate, according to TowerGroup.
Federal legislation passed in 2009 as the CARD Act was intended to protect consumers from hidden fees and expiration dates on gift cards. Since its passage, the amount that goes unspent on gift cards has been shrinking.
Still, the average U.S. household has an estimated $300 in unredeemed gift cards, according to Plastic Jungle, an online marketplace where consumers sell, buy, exchange or donate gift cards.
Only an estimated 30 percent to 40 percent of gift cards given during the holidays were redeemed in January, leaving "a long tail on redemption" from here on out, said Michael Niemira, vice president, chief economist and director of research for the International Council of Shopping Centers.
For Jeffrey, who has four gift cards in her wallet, each about 2 years old and worth a total of $150, "It's a time thing."
"Even when I would have time, I would forget that I had them," she said.
She's not the only one. Heading into the 2011 holiday season, 25 percent of adults still had at least one unused gift card from the 2010 holiday season and 55 percent had two or more, according to a Consumer Reports survey.
Their reasons were similar to Jeffrey's. The majority said they didn't find anything they wanted to buy, they didn't have time to use the gift card or they forgot about it. Some of the other reasons cited were that the card expired, the store went out of business or the card was lost.
TowerGroup said another way gift cards go unspent is that consumers spend the majority of the card's value but leave a small amount on the card.
Ten states have made it easier for consumers to get the full value of their cards by having cash-back laws that allow gift cards to be redeemed for cash if the balance is below a certain amount. Oregon's law, which went into effect last month, requires all gift cards used at least once to be redeemable for cash if the balance is $4.99 or less.
Nebraska and Iowa don't have cash-back laws.
"The fact is, a consumer should not be required to spend more than the balance of a gift card in order to receive the full benefit," said Judd Lillestrand, founder of ScripSmart, an online consumer resource on gift cards. "Because so few retailers offer a cash-back policy, you can expect to see more states enact similar legislation in the future."
Lillestrand advises using gift cards as soon as possible.
If a card is not going to be used immediately, he suggests checking the terms and conditions of the cards so you know if there are any inactivity fees or expiration dates.
ScripSmart offers a free e-mail alert service to remind consumers of expiration dates or tell them if companies are in financial trouble or file for bankruptcy.
There are other options. You could re-gift the card to someone who may be more likely to use it or you could sell it online a gift card exchange site such as PlasticJungle.com or Cardpool.com.
"People don't want to buy gifts that will go to waste. That's why they buy gift cards," Lillestrand said.
If gift cards specific to a retailer or business — not the pre-paid ones that can be used at multiple, unaffiliated businesses — go unused in Nebraska or Iowa, the money could end up in state coffers.
In Nebraska and Iowa, retailers cannot claim gift card sales as income until they are redeemed. If they are not redeemed, the retailers, by law, turn over the value to the state and it becomes unclaimed property. That means there may be money waiting for you to be claimed from a gift card you own but never spent.
In Nebraska, there currently are 6,164 unclaimed gift cards or gift certificates worth $291,763.23 in the state's unclaimed property database, according to the State Treasurer's Office. That's less than 1 percent of the state's $100 million in unclaimed property.
Only cards with an expiration date revert to the state after three years in Nebraska. Gift cards that don't expire are not defined as unclaimed property and merchants can consider the value as revenue after a given amount of time. However, the gift card is still valid and will be accepted.
In Iowa, the value of all unused cards reverts to the state after three years. The Iowa State Treasurer's Office is holding $1.8 million in unclaimed gift cards or certificates, said Karen Austin, deputy treasurer.
Some states don't have such laws and the value from unused gift cards simply ends up as income for the merchants.
Don't be surprised to see more start-ups try to tap into that revenue stream, Lillestrand said.
"There's definitely a market out there to liquidate gift cards," Lillestrand said. "Gift cards are the most requested gift and they are getting more and more popular. It's growing like crazy."
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Other ways to use your gift cards
» United Airlines has launched a new program, MileagePlus Gift Card Exchange, which allows members to convert unused or partially used retail gift cards into frequent-flyer miles. The airline accepts gift cards with a minimum value of $25 from more than 60 retailers, including Barnes & Noble, Home Depot, Bed Bath & Beyond, Office Depot and Target.
» Gift card sites such as PlasticJungle.com and Cardpool.com buy and sell gift cards, and there's a market for them on eBay and Craigslist. Plastic Jungle buys unwanted gift cards and will pay up to 92 percent of the face value of the card. Users enter gift card information, and Plastic Jungle makes an offer. Sellers receive pre-paid labels to mail gift cards to the company. Once the balance of the gift card is verified, Plastic Jungle pays for it with a check, PayPal or an Amazon gift card. Cardpool's process is similar, though it also allows consumers to trade gift cards. EBay cuts out the middle man. You're likely to get more of the card's value, but it takes longer to get the cash and there are fees to list and sell.
» EZ Money, Paycheck Advance and Fast Cash America stores in Nebraska and Iowa pay consumers cash for part of the value of unused gift cards. The stores are partners with Swapagift.com, a buy, sell and trade site for gift cards. Swapagift requires the stores to accept gift cards with a value of at least $20 from national merchants and chain restaurants. Most pay 50 percent of the card's value in cash. The stores then turn the cards over to Swapagift and they're sold at its sister site, Giftcards.com. “It gives customers the opportunity to cash them in and get the things they need like gas and groceries,” said MJ Kelly, a Swapagift.com co-founder.
» Invest the money on an unused gift card at GoalMine.com, a site that allows investment in a mutual fund for as little as $25. Consumers can trade in unused gift cards from more than 400 retailers and use the cash to fund an account. Consumers can get 150 percent of the first $50 of card value on the first card when opening a new account.
— Leia Mendoza