They don’t even need wrapping. But it helps.
If you are giving someone a gift card this holiday season, it might be worth nagging them to actually use it. New research estimates that $ 750 million in gift cards will go unredeemed this year.
What they lack in imagination, they make up for in convenience. Sales of gift cards have risen to $ 124 million this year, up from $ 118 billion last year and $ 80 billion in 2007, a 55% increase in six years, according to a new report by advisory company CEB TowerGroup. That includes retail gift cards, electronic gift cards and branded gift cards that can be used at multiple stores. But $ 750 million on gift cards will go unredeemed this year, although that’s down from $ 1 billion last year, according to the study.
It has become much harder for retailers to make money off out-of-date cards in recent years. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 ruled that they should not expire until five years after they are issued, or after the date they are loaded with money. Those rules appear to have given new life to gift cards at the bottom of the sock drawer: In 2007, 10% of gift card sales were estimated to have gone unredeemed versus 1% or less this year, according to CEB TowerGroup.
Read: When is it OK to regift?
There are other problems aside from the 5-year timeline. Only 50% of small businesses last approximately 5 years, according to the Bureau of Labor Statistics. If a business does go under, consumers (and their gift cards) may have to get in line behind a creditor who could be owed millions of dollars. And the 5-year minimum expiration date, while designed to give back more power to the consumer, may also encourage people sit on their laurels, increasing the likelihood that the cards will be forgotten or lost.
That said, they are still the most sought after gifts this holiday season with 37% of people preferring to receive them, according to a survey earlier this year of 5,000 shoppers by consultancy Deloitte LLP. Cash was the second most desired gift (35%), followed by clothing (32%) and books (26%). Helped by the popularity of digital gifts—like Starbucks coffee tokens advertised on Facebook—holiday shoppers will spend around $ 173 on gift cards, up from $ 163 last year, according to the National Retail Federation.
Though gift cards don’t even require wrapping, they are practical and help prevent waste. Even so, there are certain rules of etiquette that should be adhered to by both the giver and receiver of such certificates. While a teenage child or even spouse might appreciate one, your grandmother or mother may not, says Pamela Eyring, the president of the Protocol School of Washington, a training school that focuses on cross-cultural and business etiquette. And it’s good manners to tell the giver what you bought, she adds.