In today’s hyper-competitive retail environment, there are many companies that are struggling to make ends meet. From large retailers like Toys ‘R Us, which recently declared that it would be shutting down, to smaller local businesses, the world of retail is looking grim.
The recent closing of Toys ‘R Us, in particular, has made headlines around the world – and has left consumers wondering what they’re supposed to do when they have a gift card to a company that is going out of business, or to a store that is closing or bankrupt.
In this guide, we’ll discuss the best ways that you can avoid losing the value of your gift cards due to a store closure and bankruptcy – and your options if you have a gift card to a retailer that has already closed, or gone out of business. Let’s get started.
1. Spend Your Gift Cards As Soon As You Can
This is the #1 rule of thumb for avoiding gift card waste – and it’s equally applicable if you are trying to avoid losing money due to store closures. You should be spending your gift cards as soon as you can – not just letting them collect dust in your desk drawer.
Why? Because gift cards are unsecured debt. A gift card gives you the right to exchange it to a retailer for its value – but if the retailer goes out of business, they may not have to honor your gift card.
And, because gift cards are unsecured, there is sometimes no real recourse to get your money back you – but we’ll discuss that in further detail later on.
As a rule, you should be treating your gift cards like cash, and doing your best to spend them as soon as you can. You wouldn’t leave $200 in cash sitting around in your desk drawer – so why would you leave $200 in gift cards lying around?
If your problem is that you have too many gift cards that you don’t need, you also have options. You can sell Target gift cards, sell GAP gift cards, and sell Nordstrom gift cards to a company like EJ Gift Cards, for example.
Then, you can use the cash you get from the sale to buy things you actually need. This is better than simply sitting on the value of your gift cards without spending them.
2. Don’t Stock Up On Too Many Gift Cards At Once
This is a particularly important point for people who use gift cards instead of cash at major retailers, in order to save money. As gift cards have become more popular, many gift card “aftermarket” websites have been created.
These websites, such as EJ Gift Cards, allow customers to sell gift cards that they don’t want, and buy gift cards for discounts.
For example, using one of these websites, you could sell Apple Store Gift cards, then purchase a Home Depot gift card for 15% off, in order to do your next home improvement project.
Purchasing aftermarket gift cards is a great way to save money at stores where you shop regularly. You could get discounted gift cards to your local grocery store, for example, and save money while you’re shopping.
However, if you choose to do this, it’s important to avoid stocking up on too many gift cards at once. If you invest too much money into gift cards for a single business, you’re at quite a large risk.
For example, if you had purchased $500 of Toys ‘R Us this January, and planned on using them for Christmas gifts, you may be unable to spend all of their value before the retailer closes.
If you do purchase discounted gift cards for your own use, try to limit your spending to gift cards that you will be using in the near future – several weeks to a month, max.
This way, you won’t be stuck with a big stack of useless gift cards if one of your favorite restaurants or retailers does end up going out of business.
3. Keep Track Of All Of The Gift Cards That You Have
To help you stay on track of how you’re spending your gift cards, it’s a good idea to keep track of all the gift cards you currently have.
You don’t have to use a high-tech solution to do this. Just go through your wallet, purse, junk drawer, or desk drawers, and find all of the gift cards you have that are still valid.
Then, check their balances, and write their information down in a little logbook. Keep information such as card numbers, security codes, expiration dates, and other information handy, as well. If you have receipts for your gift cards, these should also be filed in your gift card logbook.
If you feel like doing this digitally, you’ve also got a few options. You can use apps like Google Pay and Gyft to store digital copies of loyalty cards, gift cards, and more. Doing so will help you ensure that you understand what gift cards you have, and their remaining balances
4. Keep An Eye On Businesses That May Be Struggling
If you are a heavy gift card user, it’s a good idea to keep an eye on what retailers and restaurants are not doing well. Again, as an example, Toys ‘R Us was well-known for struggling to pay its debts, and rumors of bankruptcy had been circulating since early 2017, and earlier.
Today, there are quite a few large retailers that are in financial trouble, and have an uncertain future. As of 2018, there were 26 large retailers that were facing potential financial difficulties in near future, according to USA Today.
This includes companies like Sears, Guitar Center, Claire’s, and Payless Shoes. While there is no way to predict the future, keeping an eye on financial news can help you understand what retailers may be at risk of going out of business in the near future.
5. Consider Selling Gift Cards From Bankrupt Or Struggling Companies
Selling a gift card to one of your favorite stores may not be your first choice. But it may be a good idea to do so – especially if the store or restaurant may close in the near future. If you choose to sell your gift card online, you’ll be able to turn it into cash – and spend that money wherever you want, with no risk.
In fact, some gift cards to struggling businesses may become more popular online. This is because people who are willing to take risks can get them for a lower price, in hopes that they will be able to cash in on their value before a restaurant or store goes out of business.
If you plan to sell a gift card from a company that’s struggling, you should expect to get a lower rate for the exchange than you would if you sold a gift card from a strong company, like Starbucks.
However, if you hold onto a gift card until after a company goes out of business, its value may easily go to $0 – so weigh your options when you’re thinking about selling your gift cards online carefully, and determine how much risk you’re willing to take.
6. Think About Buying Items To Donate With Your Gift Card
If you don’t want to sell your gift card online, but you also have no practical use for it in the near future, you could consider buying items to donate to local charitable organizations – such as homeless shelters, soup kitchens, and churches.
You could also donate the gift card directly to a charity of your choice – but if you do that, you risk its value become $0 if the company goes out of business, and the charity has not yet used it. For that reason, we recommend purchasing items with the card, and donating them directly to the charity.
If you’re not sure what you should buy, here are some items that are great for most charitable organizations, especially those who work with impoverished, homeless, or otherwise needy people.
- Canned goods, or foods with a long shelf life
- Toilet paper and paper towels
- Bath accessories and toiletries
- Toothbrushes and toothpaste
- First-aid kits and items (gauze, Band-Aids, disinfectant, etc.)
- Diapers, pads, and tampons
- Socks and underwear
- Warm clothing
- Blankets, pillows, and bedding
- Spices and seasonings
- Bicycles
- School supplies
- Sturdy boxes and bags
The needs of your local charities may vary, based on the season, their location, and the services that they offer. If you are still not sure what you should buy, call the charity directly, and ask an employee what goods they need the most!
Best of all, donating goods to a charitable organization can give you a tax-write off, which can be very beneficial when April rolls around!
7. Try To Get A Chargeback If You Used A Credit Card For The Purchase
Credit card companies have very customer-friendly policies in place, particularly to help cardholders avoid fraud, scams, and other such issues. There is a chance that, if you contact your credit card company after purchasing a gift card to a company that goes out of business, you’ll be able to get a chargeback, and get the value of your gift card back.
A chargeback is what occurs when a credit card company determines that you have been the victim of fraud – such as purchasing an item on eBay that never arrives at your home, or being billed for an item that you did not purchase.
When these kinds of fraudulent purchases occur, customers can contact their card agency. Then, they will issue a chargeback for the item or purchase in question. They will reverse the transaction – and either deposit the money back into your account (if using a debit card) or reverse the charges placed on your credit card account (if using a credit card).
This is one of the most powerful tools you have at your disposal, as a customer. In some cases, you may be able to get a chargeback on your gift card purchase, as long as it has been less than a month since you bought the gift card.
However, chargebacks are always determined on a case-by-case basis. There is no guarantee that your claim will be approved – though acting quickly can help increase your odds of success.
8. Keep Records Of Your Gift Card Purchases – And File A Claim
It’s always a good idea to keep thorough records of all of your gift card purchases. If you can get the original receipt for a gift card, and other information about when you purchased it, and the location from which it was purchased, you will have a much better chance of recovering your funds post-bankruptcy.
If a company does declare bankruptcy, they are under no obligation to redeem outstanding gift cards. A judge may allow them to do so, under Chapter 11 bankruptcy, but the decision rests with the bankruptcy court – not the retailer.
However, you are not completely out of luck. You will have the option to file an official claim for the recovery of your funds – just like any other creditor would. The method by which you will do so will vary, depending on your state.
When you file a claim, you will be able to ask for compensation for the gift card that you purchased. That’s the good news. The bad news is that you and other consumers who still have gift cards are pretty much at the back of the line when it comes to getting paid in bankruptcy. In some cases, you may only get a small percentage of your gift card’s value back.
However, it’s better than nothing – so keep comprehensive records, and you’re more likely to be able to file a claim if a company does go bankrupt.
Stay Safe When Buying Gift Cards – With These Helpful Tips!
Giving and receiving gift cards is wonderful – and buying and selling discounted gift cards online with EJ Gift Cards is a great way to stretch your dollar. But gift cards are not without their risks – as you can see from the above article.
However, if you take the proper steps to spend your gift cards quickly, keep track of their balances, and avoid purchasing gift cards to struggling retailers, most of these risks can be eliminated.
So take another look at our tips above, and shop without fear! At EJ Gift Cards, you can buy and sell gift cards to hundreds of top retailers – and get paid through PayPal! Getting started is quick and easy – so sign up today!
