Roughly $23 billion in gift cards go unused in the U.S. after the holiday season, and consumers now have more options for spending this unexpected windfall.
Gift cards have become a top choice for shoppers, offering a personal touch from the giver while letting recipients select exactly what they want. This prepaid trend fueled significant holiday spending—according to data from National Use Your Gift Card Day—U.S. shoppers were projected to spend around $29 billion on prepaid cards.
In this gift card frenzy, there is always a chance that a card ends up tucked away at the bottom of a drawer or a purse, waiting to be rediscovered.
“While Javelin research shows that the majority of consumers will use their gift cards quickly and in full, there will always be a small segment that sit on their card values,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research. “We are seeing positive trends for retailers who are able to digitize their physical cards which enables easier ongoing redemptions and potential reloads.”
Donating the Balance
Another emerging prepaid trend is the use of gift cards for charitable donations. When consumer don’t want to shop at the retailer on a branded card—or still have an unused balance—they can donate the funds to charitable organizations such as St. Jude Children’s Research Hospital, GiftCards4Change, or Donate Your Card.
“A key fact is that donations do not need to just be with currencies,” Hirschfield said. “Gift cards act as a currency replacement and can be incredibly useful to organizations of all types and also retain the tax benefits of a donation.”
Beyond donation acceptance, gift cards have become a pivotal part of many nonprofit disbursement operations. These organizations often rely on manual processes and traditional payment methods like paper checks. Conversely, gift cards are faster to deliver, can be digital or physical, and put purchasing power directly into the hands of those in need.
Self-Use Synergy
Aside from the benefits for nonprofits, organizations of all types are beefing up their prepaid programs. Gift cards and stored-value accounts—such as the balances shoppers keep at Starbucks or Amazon—can integrate seamlessly with loyalty and engagement programs.
This highlights one of the most important trends in prepaid: the increasing frequency of self-use. This trend is likely to continue growing as consumers have more options to buy and spend gift cards, potentially reducing the number of unused balances.
