Warning about gift card charges

[Mike Henderson]

As someone else said sound like a prepaid credit card not a gift card.

Stores push gift cards because the redemption rate is very low. for example I was told by a store manager, years ago at his place, that every $100 in gift cards sold, only $3 to $4 is ever redeemed. Nothing like going into a store and hand them free cash.

I think that estimate is waaaay too low. Most gift cards have a redemption rate of 80% or higher (mostly higher). Of course, it depends on what the gift card is for.

But even if someone didn't want the thing that the gift card represents (say a Home Depot Card) most people would sell it at a discount and the buyer would redeem it at par. You'd have to be pretty rich to let $100 (for example) go to waste.

Mike

[I think if you ask Google that question, you'll get some estimates.]

[Jim Becker]

I think that estimate is waaaay too low. Most gift cards have a redemption rate of 80% or higher (mostly higher).

I agree, especially given how gift cards have become somewhat mainstream. Redemption rate may have been lower awhile ago when they were more of the exception. That said, I have had a few that languished for quite a while just because I forgot about them...usually something for some restaurant that was something less common for me to visit, often because it wasn't close by. But none of those were ever devalued. My older daughter did have a pre-paid card a few years ago that had fees in the fine print...

[Günter VögelBerg]

I try to avoid giving people gift cards, and never use the "prepaid" cards. The only exception is some of the at-risk youth my wife and I have mentored. We give them grocery store or clothes store gift cards because they cannot as easily be converted into other discretionary purchases that do not contribute to them making positive life choices.

[Bill Jobe]

Several years ago I bought something that netted me 2 $50 gift cards. May have been my first smartphone, I can't remember.
But by the time I got around to using them I discovered that one had been spent in California, the other in the UK.

[Dave Lehnert]

I think that estimate is waaaay too low. Most gift cards have a redemption rate of 80% or higher (mostly higher). Of course, it depends on what the gift card is for.

But even if someone didn't want the thing that the gift card represents (say a Home Depot Card) most people would sell it at a discount and the buyer would redeem it at par. You'd have to be pretty rich to let $100 (for example) go to waste.

Mike

[I think if you ask Google that question, you'll get some estimates.]

For sure that figure would very form store to store but know form experience that figure is not out of line.