Here's why you should use your gift cards as soon as possible
PHILADELPHIA (WPVI) -- Gift cards are one of the most popular presents, especially for young people.
But as large and small retail chains close or head toward bankruptcy, it is more important than ever that consumers use gift cards as soon as possible.
According to a recent survey by CreditCards.com, 47 percent of U.S. adults say they have at least one unused gift card, voucher or store credit totaling up to $21 billion.
Local spa and salon chain, Toppers, has now filed for bankruptcy which means those gift cards are pretty much worthless.
"Just frustrating that there was no warning. It just really was out of left field," said Fazad Mohamed of Middletown, Delaware.
Mohamed is talking about the abrupt closure of Toppers Spa and Salon.
"I definitely wanted to treat my wife so I'd gotten a gift card back around the holidays."
Mohamed's mother had given the couple an additional gift card to use so they made appointments for June. But at the end of April, the business closed all of its locations.
"If a company declares bankruptcy, they often set a deadline for redemption of the cards. And if you miss that deadline, then you're gonna get in line behind a long list of other creditors, and you're probably not going to get the value of your card back," said Chuck Bell of Consumer Reports.
Plus, filing a claim with bankruptcy court can be a lengthy process so it's best to use gift cards ASAP. Also, if possible, apply the gift card value to your account immediately.
Many retailers will remind you about the gift card credit the next time you check out.
And be aware the federal Card Act offers you protections.
"The value of the money on the card is supposed to be good for five years. However, if you don't use it in the first year, you can experience an inactivity fee, which gradually drains the money out of your card," said Bell.
When you do use the card, watch out for the spending trap. Plan your purchase to be as close to the gift value as possible. And if you get a receipt with your gift card, save it in case - for some reason - the card doesn't work.
"You can also sell your gift cards at certain sites for a discount, usually around 80 percent of the value of the card," said Bell.
Gift card resellers include Raise.com, CardCash.com and GiftCardBin.com.
Other resources:
How to Keep Your Gift Cards From Going to Waste
Can You Get a Deal on A Gift Card
Pros and Cons of Giving Gift Cards
Gift Cards and Bankruptcies: from Shelley Hunter, the "Gift Card Girlfriend"
