An estimated $24.9 billion was spent on gift cards this holiday season, according to the National Retail Federation. You were probably part of that statistic.
While many people like to hold on to gift cards for something special to buy, that's a bad idea. You're much more likely to get the full benefits if you use a card as quickly as possible. Here are the reasons why.
Stores go bankrupt. The most important reason to use a gift card as quickly as possible has to do with the current economic climate. A number of major retailers have already gone bankrupt in the past year, and it won't be a surprise to see others follow suit in 2009.
When a store goes bankrupt, the bankruptcy court holds the final say as to whether gift cards can be redeemed. While the retailer can petition the court to allow it to continue to accept gift cards, the bankruptcy court considers unredeemed gift cards to be debt and, depending on the situation, may not allow the store to honor the gift card. Basically, once a store enters bankruptcy protection, all bets are off.Gift cards get misplaced or lost. Even with the best intentions, if you don't use your gift card right away, there is a decent chance it will never be used. You may put it somewhere and forget about it or place it in a pile of other stuff never to be found again. It is estimated that anywhere from 10% to 20% of gift cards received are never redeemed for merchandise, which results in billions of dollars being wasted. While this is good news for the store and its bottom line (and why they love gift cards so much), it doesn't help your personal finances. By using the gift card right away, you avoid adding your gift card value into this unredeemed gift card number.