Americans Are Sitting on $27 Billion in Unused Gift Cards. Here Are 6 Ways to Turn Them Into Cash

There’s probably one in your junk drawer right now. Here’s how to convert it into cash — and the fee that may be quietly draining it.

Take a look in your junk drawer. Chances are, there’s money in there.

A recent Bankrate survey found that 43% of U.S. adults had at least one unused gift card, voucher or store credit. Together, those leftovers add up to roughly $27 billion tucked away in wallets, drawers and old birthday cards.

The typical person with unused balances had $244. That figure is higher than the previous year’s $187.

Put another way, $244 can cover a nice dinner for two with money left over, or a sizable chunk of holiday gifts for grandchildren. And unlike money you still need to earn, this is cash you already have. It only needs to be used.

What makes the situation worse is that more than one-third of Americans, 34%, told Bankrate they had lost money on a gift card. Some forgot to use it before it expired. Some misplaced it. Others saw the store shut down before they got around to spending it.

Retailers are fine with that. Bankrate senior analyst Ted Rossman said major chains including Walmart and Starbucks are sitting on more than $1 billion in unused gift card value.

With another round of gift cards likely to arrive during the holidays, now is a good time to clear out the old ones. Here’s how.

1. Gather them and check every balance

Start by searching everywhere. Look in the junk drawer, your wallet, old purses, the glove compartment, last season’s holiday cards and your email inbox, where digital gift cards often get buried.

Next, check how much is left on each card. Many have a phone number or website on the back, and many store apps will show the balance after you add the card.

Write the balance directly on the card or attach a sticky note. A card whose value you can’t remember is one you probably won’t use.

While you’re at it, take photos of the front and back. The Federal Trade Commission recommends saving an image of each card and its receipt, which can help if you need to report a problem to the card issuer.

2. Use the cards for stores you already visit

This is the simplest win. If you have a card for a grocery store, drugstore, gas station or restaurant you already frequent, put it in your wallet now and use it on your next trip.

Even better, use it for something you were planning to buy anyway. Spending a gift card on milk and paper towels frees up the same amount of cash in your checking account.

The holidays are an ideal time for this. Use an old card for groceries or gifts and you can reduce holiday spending without cutting a single item from your list.

The consumer services division in Fairfax County, Virginia, puts it plainly: Use gift cards quickly so fees don’t chip away at them and they don’t get lost.

3. Swap or sell the rest, with caution

What if the card is for a store you’ll never shop at? You still have choices.

You can regift it. There’s nothing wrong with that, as long as you verify the balance first and include the receipt.

You can also trade it with a friend or family member who actually shops there. A $50 card that does nothing for you may be exactly what your sister wanted.

Another option is selling unwanted cards through a gift card exchange site. Just remember that these services usually pay less than the face value, and rates vary by retailer. Compare offers before you sell.

Be careful going the other direction. Fairfax County warns people not to buy gift cards on auction or classified-ad websites, where cards can be stolen or fake.

And never let a gift card become a payment method for anyone who calls, texts or emails you. The FTC says legitimate companies and government agencies do not ask to be paid with gift cards. If someone does, it’s a scam.

4. Understand the federal time limits

You have more time than you may think, but not forever.

Under federal rules that took effect in 2010, money on a store or bank gift card generally cannot expire sooner than five years after the card was issued, or five years after money was last added to it, according to the Consumer Financial Protection Bureau’s regulation.

The same rule also limits fees. Issuers cannot charge dormancy, inactivity or service fees unless the card has gone unused for at least a year. Even then, only one such fee can be charged per month, and it must be clearly disclosed.

So a card you have ignored for more than a year could be shrinking. That is another reason to use it now instead of someday.

Check the back of each card, or its packaging, for expiration dates and fee details. If a card appears expired, don’t throw it away until you call the number on the back.

5. Spend cards from weaker retailers first

In the Bankrate survey, 12% of Americans said the store closed before they could use the card.

That risk is real. A retailer that goes bankrupt may not honor its cards.

So sort your stack. If you have a card from a retailer that is closing stores, struggling publicly or simply not as stable as it once was, use that one first.

A card from a large, healthy chain can wait a little longer. A card from a retailer on shaky ground should not.

6. Look at your state’s unclaimed property database

Here’s a step many people never consider. In some states, leftover gift certificate balances can end up with the state as unclaimed property, along with forgotten bank accounts, uncashed paychecks and utility deposits.

The rules vary widely by state, so you should not assume your old gift card will turn up there. But the search takes only a couple of minutes, and you might uncover something else you forgot about.

MissingMoney.com, a free site sponsored by the National Association of Unclaimed Property Administrators, lets you search multiple states at once. You can also go directly to your state’s unclaimed property website. Searching costs nothing, so there is no reason to pay someone else to do it.

If you enjoy tracking down missing money, look for other forgotten funds too, including savings bonds that have never been cashed and unclaimed property payouts in states such as Texas.

The bottom line

Gift cards are cash with strings attached. The longer you keep them, the more those strings can multiply through fees, store closures and simple forgetfulness.

Set aside 20 minutes this week. Collect every card, check the balances, spend what you can and swap or sell what you cannot.

Then put the recovered money toward your holiday plans. If you want help organizing seasonal spending, budgeting tools are available in our Solutions Center.

That average $244 sitting with the typical holder will not transform your finances. But it belongs to you, and it is far better in your pocket than on a retailer’s books.