What to Do About Unused Gift Cards: Strategy, Law, and Opportunity

Unused gift cards can be a hidden goldmine—or a legal liability—depending on how your business handles them. Whether someone forgets to redeem their balance or just never gets around to using the card, you need a plan that’s smart, compliant, and customer-friendly.

This guide breaks it down into three parts: how to approach unused gift cards strategically, what the law says, and how you can turn breakage into business value.

Strategy: How to Handle Unused Gift Cards the Smart Way

Create a Follow-Up Flow for Unused Balances

Don’t let unused cards sit idle. Instead, build automation that nudges users to redeem them.

• Email reminders sent 30, 60, and 90 days after purchase
  
  
• “Still have a gift card?” campaigns around key seasons
  
  
• SMS or push reminders for digital cards
  
  

These flows can recover revenue and build goodwill.

Encourage Full Redemption with Bundled Offers

If someone has a small remaining balance—say, $8—consider promoting a bundled item or service that fits just above that price point.

Example: “Add $5 and turn your gift card into a [premium product or service]”

This drives upsells while reducing leftover balances.

Incentivize Return Visits

Use unused balances as a re-engagement tool:

• “Spend the rest of your card and get 10% off your next visit”
  
  
• “We noticed you still have $12—grab something sweet before it expires”
  
  

It’s not just about redemptions—it’s about retention.

Law: What You Need to Know About Gift Card Regulations

Gift card laws vary by region and can be confusing, but a few core rules apply across most of the U.S. (and similar regions).

Expiration Dates Are (Mostly) a No-Go

Under U.S. federal law (CARD Act), gift cards can’t expire for at least 5 years from the date of purchase or last load. Some states ban expiration dates altogether.

Check state laws: places like California and New York have additional rules protecting cardholders.

Fees Are Heavily Restricted

You typically cannot charge inactivity or service fees unless the card has been inactive for at least 12 months—and even then, the fees must be clearly disclosed.

If you’re using a third-party processor or provider, make sure their terms align with these regulations.

You May Have to Report Breakage as Unclaimed Property

In some states, unused gift card balances may be considered escheatable (i.e., abandoned property). This means you might be legally required to report and surrender the funds after a certain period.

Consult with your accountant or legal team to stay compliant and avoid surprises.

Opportunity: Turning Unused Balances Into Brand Value

Breakage Can Help Your Bottom Line—When Done Right

“Breakage” refers to the percentage of gift cards that go partially or fully unredeemed. While you can’t count on it as guaranteed income, it does represent real margin if handled within legal and ethical boundaries.

Some brands use this buffer to:

• Offset promotional costs
  
  
• Fund loyalty perks
  
  
• Reinvest in customer experience
  
  

Just be sure to balance this with a good customer redemption experience.

Use Redemption Data to Refine Your Strategy

Tracking unused cards gives you insight into:

• Who buys vs. who redeems
  
  
• Average time to redemption
  
  
• Drop-off points in the customer journey
  
  

Want to see this in your data? Set up gift card tracking in Google Analytics to find out how your cards are really performing.

Re-engage Givers and Recipients

Remember: gift cards create two customers—the buyer and the recipient. Unused balances are a chance to target both.

• Reach out to the giver with reminders or offers to send another
  
  
• Encourage recipients with suggested items that match their balance
  
  

When used creatively, this extends your customer lifecycle and boosts lifetime value.

Make Unused Gift Cards Work for Your Business

Unused gift cards don’t have to be a liability. With the right strategy, they can drive revenue, improve retention, and offer valuable insight into your customers’ behavior. Whether you’re refining an existing program or just starting to track redemption trends, treating breakage as a business opportunity—within legal bounds—puts you ahead.

Need help turning gift cards into a reliable revenue stream? Ncentiva specializes in gift card programs that are easy to implement, simple to track, and built to grow with your business. From compliance guidance to promotional strategy, our team can help you make the most of every card sold.

Let’s build a gift card program that delivers value long after the purchase. Reach out today to get started.

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