So, gift cards. Can we talk about gift cards? I bought three at Target last December—two are still floating around in my glove compartment or maybe my coat pocket, who knows. Everyone acts like giving them is some selfless act, but is it? The National Retail Federation guy says Americans dump about $30 billion into gift cards every holiday, and nobody ever asks where the leftovers go. Here’s the weird part: every time you forget or ignore a card, retailers just keep that money. Billions, just sitting there, never getting used. I mean, does anyone really believe their aunt’s going to use that $15 coffee shop card? Or does it just rot with the broken pens and the mystery keys?

Oh, and nobody ever points out that companies get all the cash up front, and they don’t have to do anything until you remember to buy socks or a latte. Retail Gift Card Association claims they “want” you to use every penny, but, come on, the math says otherwise. There are these accounting hacks I picked up in my e-commerce days—gift card breakage slides right into “other income” on the books. My boss thought I was making it up until he saw the numbers. Meanwhile, everyone else just shrugs and sticks another card in a birthday envelope. Supposedly, gift cards make shopping less stressful, but I’ve never seen anyone look relaxed when that barcode won’t scan.

So if you’re tossing plastic into a gift bag and feeling generous, maybe take a second to check the fine print. No one brags about accidentally tipping Old Navy $10, but, wow, millions of us do it every year. Free money for retailers, and you don’t even get a thank you.

How Retailers Profit From Holiday Gift Cards

The numbers kind of make my brain hurt—like, $1 trillion in sales over a decade, $45.7 billion just sitting there, unspent (I googled it, it’s real). Retailers aren’t just selling plastic rectangles; they’re basically printing money and hoping you lose it. People hand over $25, $50, $100, and then—poof—forget. Why are stores so happy to push these things? Obvious, right?

The Economics of Gift Cards

Try telling anyone who works at a big chain that gift cards are “just thoughtful gifts.” They’ll probably roll their eyes. They get the money right away, no waiting. When you buy a card, the store marks it as a liability on the books, not revenue—like a promise they’re betting you’ll break.

Blackhawk Network says people will spend about 43% of their holiday shopping budget on gift cards this year. That’s almost half. Finance teams literally plan their whole end-of-year around this. My old accounting professor (shoutout, Dr. M) used to say, “Gift cards are like IOUs that nobody cashes.” Retailers use that float—the time between selling the card and you actually using it—for whatever they want. If you never use it? They keep all of it. Not even a sale needed.

Breakage: The Secret Windfall

Who actually uses all their gift cards? Not me. Not anyone I know. “Breakage” is what the industry calls the money they get when you forget or lose your card. Sounds fake, but it’s real. $45.7 billion in breakage from 2005 to 2015, according to some market report I barely skimmed. Not a typo.

Once a card hits its expiration or sits unused long enough, stores just move that money from “we owe” to “we earned.” Best Buy, Target, Starbucks—they all count on breakage. About 10–19% of all gift card money goes unused. I overheard some guy at a conference say breakage pays the January heating bill. Not even kidding. I’ve watched the numbers show up in quarterly reports like magic.

Unredeemed Balances and Retailer Gains

Still have three old gift cards from last year? Welcome to the club. Most people never use the whole balance. Even if you leave a few bucks, multiply that by millions of cards and it’s a pile of cash. You spend $23.17 of a $25 card, and that last $1.83? Gone forever.

Fiserv says people overspend by $59 on average when using a gift card. That extra? Retailers love it. It’s like an upsell without even trying. Unused gift cards basically give stores free loans—zero interest, no strings. And after state laws expire? The rest is theirs. Why do I keep buying these? I don’t know. Habit, I guess. Retailers must be laughing every time I grab another one.

The Role of the Holiday Season in Gift Card Sales

You’d think we’d all be sick of gift cards by now, right? Nope. My neighbor once bought twelve coffee shop cards for every relative. Twelve. Shows just how much these things take over the holidays. I keep expecting the numbers to drop, but every year—nope, still huge.

Why Gift Card Sales Peak During the Holidays

November hits, and suddenly every checkout is buried in gift cards. I used to ignore them, but now I know Fiserv says over 40% of people buy cards to pad their gifts or just because they don’t know what else to buy. My friend in retail says those racks move faster than actual Black Friday deals.

It’s not just laziness. Sometimes people are clueless or just don’t want to risk getting something weird. PLI says 33% of shoppers buy a card because picking a real gift is too much work. I’ve seen stores slap snowflakes and reindeer on cards just to make them look festive for last-minute shoppers. Plus, you can use them anywhere, which matters if your family is scattered everywhere.

Holiday Gift Shopping Trends

Walk into any store in December, and you’ll see racks of holiday gift cards. Most people don’t notice, but it’s 100% planned. Surveys always show people plan to buy gift cards—Fiserv says 21% buy big ones as the main gift. A $100 spa card is way safer than guessing someone’s favorite candle scent.

Here’s something weird: I asked my cousins what they bought last year. Every single one bought at least one gift card—either for a promo or to skip mailing actual presents. Even my dentist hands out branded cards for referrals now. Not exactly a tradition, but retailers use gift cards to lure new customers and boost holiday sales. Studies keep saying the trend isn’t going away, no matter how many “personalized” gift guides show up.