Troubled times call for speedy gift card redemption
As the economy slows and inflation picks up, consumers may want to redeem their gift cards as soon as possible.
Higher 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.