Gift Cards: Use Them or Lose Them

If you received a gift card over the recent holidays, you'd better get to using it fast. With US retailers hurting and many seeking bankruptcy protection, the value of your gift card could shrink to zero. Sharper Image, which recently filed for Chapter 11, has announced that it is suspending acceptance of gift cards at least temporarily.

“One must be poor to know the luxury of giving.”

—George Eliot

If you received a gift card over the recent holidays, you'd better get to using it fast. With US retailers hurting and many seeking bankruptcy protection, the value of your gift card could shrink to zero. Sharper Image, which recently filed for Chapter 11, has announced that it is suspending acceptance of gift cards at least temporarily. Chapter 11 rules allow companies to treat gift cards as debts rather than as cash, so the chances of getting any money back are slim.

Gift cards rang up $26 billion in sales last holiday season. But as more retailers shut up shop, consumer advocates say, as much $75 million worth of those cards could soon morph into worthless plastic. Although some big-name retailers may go under, the highest risk is to small businesses and restaurants and consumers who have gift cards to these types of businesses should use them quickly.

If you have a gift card from a bankrupt business, there may be some hope. If the company is bought out, the new owner may honor the gift card. The bankrupt firm’s competitors may also seize the chance to drum up new business. Brookstone, a Sharper Image rival, is offering to exchange Sharper Image gift cards for a 25% discount off any purchase, no matter what amount is stored on the card or how much the item costs.

27%Percentage of Americans who have a gift card left over from 2007.(Consumer Reports, 2008)