Unused Gift Cards: What Happens If The Company Files For Bankruptcy Or Goes Out Of Business?

When Companies Go Bankrupt
Giftcardblogger.
com has just released a gift card alert due to the fact that Linens and Things may be going out of business. 

And, another recent alert urged customers to use their Borders bookstore cards right away for similar reasons.  

The fact is, if you are holding on to gift cards right now, you are sitting on money that you could lose if the company that it is connected to those cards goes belly up. 

For example, when stores like The Bombay Company and Sharper Image declare bankruptcy, they typically invalidate all of their outstanding gift cards at the same time.  That means that gift card holders are simply out of luck. According to a story on TheStreet.com, the same card that could purchase a zero-gravity machine in December, is nothing more than an expensive bookmark now.   

A Glimmer Of Hope...
For those whose gift cards have already been made worthless by bankruptcy proceedings, don't toss out those cards just yet.  As companies emerge from bankruptcy proceedings, you may find that your gift cards are once again good. 

For example, while Gizmodo mocks Sharper Image for putting the company up for sale, the report gives gift card holders hope that they will recoup some of their losses.   

In addition, for a limited time, Sharper Image has decided to allow consumers to redeem gift cards, if and only if they spend an equal amount in cash.  This means that if you want to redeem your $50 gift card, you must purchase $100 in merchandise.

What Are Your Options?
So, what can you do make sure you don’t lose the value on your gift card should a retailer suddenly go into bankruptcy?  Here is my advice: 
 

#1 Use your gift cards immediately. Think of your gift cards as money.  If you would not forget about cash sitting in your wallet, why would you forget about your gift card?   

In addition to the possibility of Linens and Things closing, that same gift card alert warns of 31 other retailers that are in potential danger.  While there is no concrete news that any of these retailers will close, considering the current economy, it makes no sense to keep gift cards in your wallet when you could use them to freshen your wardrobe, purchase gifts in advance, and decorate your home.

#2 If you get a gift card you cannot use, then trade it immediately or make a plan to swap your unused gift cards.   


#3 Reconsider buying gift cards altogether since a great deal of them go unused. Consumer Reports states that consumers waste $972 million each year on unused gift cards. 

The fact of the matter is... gift cards are largely unappreciated by their recipients.  According to MSN Money, gift cards are not gifts so much as they are a way to say, "There! Checked you off my list." 

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