How much do credit card companies make on unused gift cards?
Is there a way to see how much the credit card companies collect yearly on unused gift cards?
I am referring to the gift cards that are administered by the credit card companies (i.e. American Express gift cards, or Visa gift cards).
I always make it a point to use up literally every penny, but I’m sure there are tons of people who have change left on it at expiration and a ton of people who forget about them completely when they expire.
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7 Answers
According to the 2006 article, 10% of all gift cards purchased won’t be used.
In many cases, the credit card companies only facilitate the transactions of the cards. They may not be the holding company for the card funds. The actual owners of the cash in card account is a company formed for that purpose. It may be the store retailer, or it may be a retail group. The money goes into an account, and the float—the difference between the money that comes in and what’s used, is invested. The profits earned on the float are more than enough to pay the transactional fees that are paid to the credit card processing company for processing transactions.
@Zen_Again, and my parents said college is wasted on girls
boohoo. crying in my pillow.
The unused balance on gift cards is now considered to be escheatable in many states, that is to say, they fall under the abandoned property laws which requires unclaimed property to revert to the general cash operating funds of the state.
In New York there was a court case involving a gift shop in the Albany area. The gift shop was converting (recording as income) any gift card balances unused five years after the issuance of the card by the store. The store claimed that there was a contract between the card purchaser or cardholder and the store that governed the disposition of unused funds.
The court disagreed and stated that unused balances are unclaimed property and must revert to the state under existing escheat laws. In other words, if you don’ t use a balance on the gift card, then the unused cash must be reported to the state of New York and remitted to the State Comptroller’s office five years after issuance.
The basic idea is that the retailer should not profit if the card is not used. You can debate this but this is becoming law in many states.
SRM
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