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I wonder how much revenue gets booked at chain stores during the holiday season when gift cards are purchased but then never redeemed? Well, count retailers to try and make the period for using gift cards shorter and shorter so that they can book more gains on those unused cards.Not so fast, really. Most retailers I have seen do not put an expiration on their gift cards at all. But recently, it was rumored that retailer Best Buy Co., Inc. (NYSE:BBY) had stuck a two-year expiration period on gift cards. I can't say if this rumor is true or not.
Now, I am not sure who would wait for two years to use a gift card, but the retailer was posting revenue on its sales to which merchandise was never being exchanged for via gift cards. Pretty nice built-in cash machine, eh?
To those who receive Best Buy or other retail gift cards this year for the holidays, rest assured that there will more than likely be no expiration date on them. Use them in a decade for that new $50 plasma TV, perhaps.
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Reader Comments (Page 1 of 1)
12-20-2006 @ 8:50AM
Roger Pyle said...
I have always wondered how retailers account for unused gift cards. Billions of dollars are sitting in drawers, never to be used. If there no time limit, does it just "evaporate?"
12-19-2006 @ 8:24PM
Kelly E said...
The money from unused gift cards is supposed to be turned over to the state where it was purchased (escheated) as unclaimed funds after a length of time. To hang onto this revenue, many gift cards have a monthly service fee which kicks in when the card has been dormant for a while. This way the retailer can deplete the balance from the card instead of forfeiting the funds. Always read the fine print!
Besides, why hang onto a gift card for years? A $50 card will have more purchasing power in 2006 than it will in 2016.