Experts say there is over $45 billion left on unused gift cards nation wide

GOLDEN TRIANGLE, Miss. (WCBI) – $45 billion… That’s the amount one report estimates Americans have sitting on unused gift cards.

Some reports would have you believe the money will remain on the card forever; however, Bank of Commerce Branch President, Mark Crigler says otherwise.

“I would think that the business does have it. They just have to account for it differently than a straight sale,” said Crigler.

Accounting for it differently means listing the money as “liability” instead of “revenue.”

“It can only become revenue when the company has done what it’s supposed to do, and that’s provide the merchandise or provide the service,” said Associate Professor at Mississippi State University’s School of Accountancy, Dr. Noel Addy.

Just because the unused “store credit” isn’t labeled as revenue, doesn’t mean the company does not have access to it.

“Yes, that money has been available in the company’s assets to deploy in any way that they want to do it. They can invest in stocks or other bonds, they can invest in more inventory and infrastructure… All that time, the company has it available to deploy anyway they want,” said Addy.

Corporations can’t list the money as a liability forever, though.

“The IRS actually limits how long you can defer recognizing that revenue, so from a tax standpoint, if I sell a gift card, then I only have a short amount of time depending on the actual way the gift card is set up. Generally, you can only defer recognizing that revenue for two years at most,” said Assistant Professor at MSU’s School of Accountancy, Dr. Alan Stancill.

Experts said corporations are banking on consumers to not use their card’s full amount.

“I think two things can happen, and they are both to the companies good. The customer may not use all of it because there’s 50 cents or a dollar, or the customer may come in and spend that dollar but then five dollars more to buy something,” said Addy.

“Certainly as a business owner, there’s a benefit to me there because I am getting free money,” said Stancill.

Crigler said that’s why the gift card business isn’t going anywhere.

“I think they’ll continue to be popular for the consumers. I think they will continue to be popular for the ones offering the cards. It could be mutually beneficial for both parties,” said Crigler.

According to a 2016 report by finder.com, for every $100 gift card, 75 cents remained un-used.