Gift cards seem like the perfect present – let people choose what they want, no awkward returns, everyone's happy. Except gift cards are actually one of the most profitable scams in retail, and stores designed them specifically to take your money without giving you anything in return.
Here's the shocking truth: Americans alone leave about $3 billion worth of gift cards unused every year. That's not lost or stolen cards – that's money people just never spend. And retailers are counting on it.
When you buy a gift card, the store gets your money immediately but doesn't have to give you any product. They book it as revenue right away. If you never use the card? That's pure profit. They literally got paid for doing nothing.
Retailers have spent decades studying the psychology of gift cards to maximize the money that goes unspent. They've figured out exactly how to design these cards to ensure you'll leave money on them.
First trick: the leftover balance. You get a $50 gift card, spend $47, and now you have $3 left. That's not enough to buy anything meaningful, so you forget about it. Retailers call this "breakage," and they make billions from these tiny leftover amounts.
Second trick: expiration dates and fees. Some gift cards lose value over time or charge monthly maintenance fees after a certain period. The fees slowly drain the card until there's nothing left. This was so predatory that laws were passed to limit it – but loopholes still exist.
Third trick: making you spend more than the card's value. Studies show that 72% of people spend more than their gift card amount when redeeming it. You have a $25 card, but the item you want costs $35, so you pay the extra $10. The store just tricked you into spending your own money using your gift.
Fourth trick: specific store cards instead of Visa/Mastercard gift cards. Store-specific cards trap your money in one retailer. If you don't like that store or can't find anything you want, tough luck. Your money is stuck there forever.
The most insidious part? Gift cards actually change how you value money. Studies show people are more likely to splurge or buy unnecessary items when using a gift card versus cash. The card doesn't feel like "real money" to your brain, so you spend more carelessly.
Retailers also love that gift cards bring customers through the door. Even if you use the full value of your card, they got you into their store where you might impulse-buy other things. It's a customer acquisition strategy disguised as a gift.
Some companies have even been caught making it deliberately difficult to check gift card balances or redeem them online, hoping you'll just give up and let the money sit there unused.
Here's the bottom line: when you buy someone a gift card, there's a 10-20% chance they'll never use the full value. You're essentially giving the store free money while thinking you're giving someone a present. Gift cards aren't convenient gifts – they're psychological traps designed to separate you from your money as efficiently as possible.