Did Santa bring you more gift cards this holiday season? Do you have a pile of partially used gift cards with small remaining balances? You can redeem them as part of a larger balance, but if you don't regularly shop at that merchant, that may not be practical.
Many consumers forget about partially used gift cards until the redemption value expires – leaving them useless for anything but scraping gum off of shoes or shimming wobbly end tables.
Did you know that you might be able to redeem the remaining balances for cash? Stores may have policies against cash redemption, but state law can dictate that companies must reimburse you if the remaining value is below a certain dollar limit.
The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 established baseline rules regarding gift cards, setting limits on inactivation fees and expiration dates. State laws work within these boundaries to establish internal gift card redemption policies.
A dozen states/territories currently have laws regarding cash redemption of gift cards. California is the most generous, with a mandate that any gift card worth less than $10 is redeemable for cash.
Colorado, Maine, Massachusetts, Montana, New Jersey, Oregon, Puerto Rico, and Washington all have laws mandating cash redemption at card values below $5 – although some laws have exceptions and other caveats. For example, Oregon's law requires that the card must have been used for at least one previous transaction.
Massachusetts adds a 90% redemption rule that applies when you can't add more funds to the card. You can redeem the card for cash once 90% of the face value is spent – so gift card denominations greater than $50 could bring higher redemption values. Other limits and restrictions apply in certain states.
The stingiest states of those that offer cash redemptions are Connecticut with balance limits below $3 and Rhode Island and Vermont with balance limits below $1 – although Kansas may be the least redemption-friendly state. Kansas passed a state law mandating that no merchant will be required to offer to redeem a gift card for cash.
Most state laws regarding gift cards are summarized on the National Conference of State Legislatures (NCSL) website, but the NCSL list is only current to 2016. Contact your state Attorney General's office for the latest updates on gift card redemptions.
Where there's no applicable state law, store policies dictate cash redemption rules. As noted above, Kansas state law on cash redemption is unique – but stores are still welcome to offer cash redemptions if they choose to do so.
If your gift card is reloadable, consider adding more money to it to clear out the account with a future balance or use it as a budgeting tool, loading only the amount you plan to spend with that retailer each month. That's a great option for merchants like Panera and Starbucks, helping you control spending by realizing how your small purchases add up each month. (Drat, I've used up my latte allowance!)
Check the card to verify that it's reloadable. Instructions may be on the back of the card, but you may have to call the merchant to verify. Also, make sure you understand any fees or loading charges before choosing to reload. You may be better off with cash redemption for small balances.
Don't let gift cards sit until the remaining balance expires. Check your state laws and the merchant's gift card policy to determine your options and take action to clear out the card or reload it. Why throw away any money at all, even if it's a small amount?
If you have a few gift cards that you can redeem for cash, why not put that amount to paying off some of your debt? If you want to reduce your interest payments and lower your debt, join MoneyTips and use our free Debt Optimizer tool.