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Should You Give Gift Cards? They May Not Be Used

What can you get for the person who has everything? Increasingly, consumers are turning to gift cards. You can buy one at a retail outlet, a restaurant, or online for a specified amount. Gift cards are convenient, and they let recipients choose how they want to spend the money.

Yet while gift cards may seem like a good choice, very many are never used. According to a recent survey, more than $30 billion worth of gift cards are gathering dust in American households. The survey was conducted by Plastic Jungle (whichhas a vested interest, because it will buy unused cards at a discount). Plastic Jungle reports that U.S. consumers buy about $90 billion in gift cards each year, and it estimates that more than one in 20 goes unused.

Surprisingly, retailers would prefer for recipients to use their gift cards. For one thing, some states are claiming unused balances under laws that allow them to collect funds in abandoned bank accounts. And retailers know that consumers are likely to spend more than value of a gift card once they actually get into the store.

Would you be better off simply giving gifts of cash? That’s often considered to be impersonal, and the money may get spent on routine expenses. But if you go the gift card route, try to make sure it’s for something the recipient is likely to use.

This article was written by a professional financial journalist for Legend Financial Advisors, Inc. and is not intended as legal or investment advice


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