September 26, 2007

Where Can I Redeem Gift Cards for Cash?

This is one of the most popular questions that we get from people visiting our website. Based on our research of state laws governing gift cards, there currently is not a law in place that requires companies and retailers to provide gift card redemption for cash. However, Washington State law does allow for the redemption of gift cards for cash if the value of the gift card is less than $5. Therefore, gift card issuers are left to set their own policies on whether they will allow for cash redemption of gift cards. We don’t see this becoming a reality unless mandated by law, because redeeming gift cards for cash goes against their business interest for the following reasons.

1. Companies actually make money from purchased gift cards that will never be redeemed for cash. Home Depot’s 2005 quarterly SEC filing disclosed that they expect to reap $43M in income from “breakage”, gift cards that will never be redeemed.

2. Department stores, such as Target and Walmart, and chain restaurants know that consumers have a tendency to spend more than the value of the gift cards. To them gift cards are an incentive for people to buy more and spend more.

3. In addition, it costs the retailers money to implement and maintain a gift card program, from the data processing to material cost for the plastic cards to the discounts offered for volume purchases.

Either way you look at it. It is not in the merchants’ best interest (bottom line) to offer gift card redemption for cash, as this would most likely result in them loosing money.

The best thing you can possibly due with the gift card is to use the full face value of it, trade it for another gift card from a different store, or resell it for cash. We’ve written a good article describing the options available to get the most money (including cash) for your unwanted gift cards.

If you do decide to resell your gift card for cash, you’ll most likely not get the full face value, because buyers would demand a discount for taking the risk of buying gift cards on the secondary market vs straight from the issuers. For example, there are businesses and websites will buy certain gift cards for 70% to 80% off the full value. We don’t think this is a good idea. What we recommend you do is to check what the market resale price for your gift card is at and then list it on your local area’s Meet face to face in a public place, such as the retailer so the buyer can verify the gift card’s value and only accept cash for it.

Getting the Most from Unwanted Gift Cards []

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