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Troubled times call for speedy gift card redemption

Jeremy Simon

As the economy slows and inflation picks up, consumers may want to redeem their gift cards as soon as possible.

First_Data_gift_card_study.gifHigher costs mean that consumers’ buying power is decreasing — your $25 gift card buys less today than it probably did when it was first received, and it may get you even less tomorrow. While astronomical gas prices may be the most obvious sign of the times, other everyday items are also getting increasingly expensive. In the latest news, consumers will soon be spending more on diapers, toilet paper and tissues: Consumer products maker Kimberly-Clark is raising prices on Huggies, Cottonelle and Scott bathroom tissue, Kleenex and other products as energy and raw materials costs increase.

Meanwhile, as household incomes slow consumers need to spend money wherever they find it, including the value stored on unused gift cards. “If times are good, people aren’t in any hurry to redeem gift cards,” says Dan Horne, associate professor of marketing at Providence College, in a conversation with stored value newsletter Prepaid Trends. Horne conducted a consumer survey on behalf of the Network Branded Prepaid Card Association that focused on consumers’ opinion of network-branded gift cards. “In times like now, people don’t want the resources sitting on the card,” he says. That a good reason for consumers to recover money stored on expired gift cards, as well.

The weak economy also spells trouble for businesses. As U.S. corporations go belly up, consumers can get stuck holding unredeemed gift cards with nowhere to spend them. Sharper Image gift card holders got a taste of what can happen when that company declared bankruptcy earlier this year.

Wisely, consumers have already been taking action. Horne’s survey, conducted in February 2008, showed that only 8.6 percent of respondents waited longer than a month to use their gift cards.

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  • Ralph Lamartine

    I signed up with Trans Union Settlement at http://www.listclassaction.com. They promised to send me an E-mail with my registration number. No E-Mail ever arrived. My benefit option was 9 months.
    “HOW DO I GET MY CREDIT REPORTS?” I went back on line asking Trans Union, but they want $14 per month for the service. I don’t understand?

  • Ralph,
    I will continue to investigate whether this is a common problem, but so far I haven’t come across any other consumers who never received their registration number. However, after signing up, I did get an email that said my registration number was received, but not my benefit selection — so I had to reply and provide my benefit selection again.
    Since email problems are common in general, for now I’d recommend you check that any response from TransUnion wasn’t filtered into your junk mailbox.
    You can also send a follow-up email to
    administrator@listclassaction.com or try the toll free number 1-866-416-3470.
    -Jeremy

  • hi jeremy,
    do you know what the statistic is that shows the percentage of gift cards that get redeemed for partial or whole value of the gift card? i know it’s smart for retailers to promote gift cards because not all customers use them or use the full amount. i would appreciate you expertise on this.
    thank you –
    kristin

  • Kristin,
    According to a Consumer Reports survey conducted in October 2007, 27 percent of gift cards recipients did not use one or more their gift cards from the year before.
    http://www.consumersunion.org/pub/core_financial_services/005188.html
    Hope this helps.
    -Jeremy