Consumer experts have told those lucky enough to have received a gift card at Christmas to make sure they spend it while the retailer is still in a position to honour it.
Stores pocket about £360m each year from cards that get lost down the backs of sofas or otherwise expire before being used.
The UK gift card industry is worth about £6bn a year. The UK Gift Card and Voucher Association said purchases grew 7.2% in the first half of 2019 compared with the same period in 2018, and that the typical card was worth about £30.
The growth comes despite the number of high-profile stores that have collapsed in recent years, leaving thousands of gift card holders out of pocket.
When Thomas Cook collapsed in September, one Milton Keynes family who had saved £800 on the travel firm’s gift card for a trip to Disneyland found they had lost the lot.
About 25,000 House of Fraser customers were unable to spend their gift cards when the department store chain collapsed late in 2018. Gift card holders at Toys R Us, HMV, Maplin, BHS, Jessops and American Apparel have also similarly lost out.
Guy Anker, the deputy editor of MoneySavingExpert.com, said: “When it comes to Christmas presents, a lot of people prefer to buy a gift card than give cash. But cash is often a far better option as it’s safer, more flexible and doesn’t have a hidden expiry date.
“The main issue with gift cards is that if the shop goes bust, gift cards may quickly become worthless. If you really want to give a gift card there’ll be less risk if it’s from a store in good financial shape or is a card you can use at multiple stores. And if you do get gift cards this Christmas, remember to check when they expire and try to spend them as quickly as possible.”
Cards expiring before the owner can use them has become a common consumer complaint. Retailers such as Amazon offer 10-year expiry dates but Ticketmaster offers 12 months. WH Smith card holders have 24 months to spend their balance before they lose it.
The then consumer affairs minister, Jo Swinson, said in 2014 that 6% of vouchers bought by consumers went unused because they laid forgotten in people’s wallets or drawers.
A spokesperson from the UK Gift Card and Voucher Association said younger shoppers were driving the growth of gift cards. More than 40% of buyers aged between 18 and 35 make a gift card purchase every two months.
“The continued growth of gift cards is hardly a surprise, not least as they give shoppers the chance to buy a gift they’ll treasure, while helping to prevent unwanted presents from ending up as landfill.
“More people are also spending their gift cards quicker than ever, too. Our research found 98.6% of UK shoppers spend their gift cards within a year, and 50.3% redeem them within a month of receipt.”