Consumers are getting better at squeezing every last penny in value out of the gift cards they receive as holiday presents, new research shows. And a pretty penny that is, indeed. The savings from reduced spillage, the amount of value left on a gift card that a consumer never spends, is still projected to reach $1.7 billion this year.
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Three-quarters (75 percent) of consumers will spend the all the money on their gift cards this year, while 30 percent will spend $25 more than the value of the card, which will help cap abandoned money at $1.7 billion, according to a survey by advisory company CEB TowerGroup of its more than 16,000 members.
New rules will also help shoppers spend more of the money on their cards. "Consumers can now more easily use all the funds loaded on their gift card thanks to safeguards put in place by Title IV of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, which severely restricts expiration dates and fees," said Brian Riley, Tower Group senior research director.
CEB forecasts that roughly 85 percent of the U.S. population will give gift cards this year, with sales of gift cards passing the $110 billion mark.
Helping propel gift card sales past the $110 billion mark is an increase in purchases of restaurant gift cards ($19 billion), merchant cards ($36 billion), and open-loop gift cards that can be spent anywhere, like those offered by American Express, Visa, Mastercard and Discover ($40 billiion).
While electronic gift card sales have increased since tracking began in 2010, sales in 2012 are only projected to reach $3 billion, reflecting slower than initially projected adoption.
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Gift cards rebounded well after the two years of slow growth in 2008 and 2009 that accompanied the economic downturn. CEB, which has tracked gift card sales and use since 2006, suggests that the market will top $130 billion in sales by 2015, with electronic gifting growing from $3 billion in sales (2012) to roughly $16 billion by 2015.
"Consumers continue to flock to gift cards as a popular gift choice due to the variety and assortment of cards available," Riley said.
Reach BusinessNewsDaily senior writer Ned Smith at email@example.com. Follow him on Twitter @nedbsmith.