NEW YORK (MainStreet) — The U.S. gift card market is valued at $126 billion, up from only $19 billion in 1999, according to data from CardHub.com. That's estimated to climb to $138 billion next year, or about the annual gross domestic product of New Zealand.
But there's a glitch in gift card paradise: A surprising percentage of gift cards go unused. Make no mistake, when you lose or otherwise don't use a gift card, that's a "gift" that goes right back to retailers and state tax coffers.
About $41 billion worth of gift cards went unused from 2005 to 2011, by some accounting, with another $2 billion unredeemed in 2012.
To keep those billions from going right back into the pockets of retailers, consumers need to get smart and go digital with their gift cards, especially with holiday giving.
Electronic gift cards are already growing in popularity. According to Bankrate.com, 59% of gift cards are now available in digital form, up 18% from 2010.
Millennials, in particular, are a natural for e-gift cards, as they are the demographic most likely to lose their gift cards, according to Bankrate. All told, 40% of Americans between the ages of 18 and 29 report losing a gift card. But that's also an age group that should benefit from gift cards now being widely available through mobile apps and email downloads, where "they're hard to lose," Bankrate says.
In fact, "there are lots of reasons why electronic gift cards appeal to customers," says Jeanine Skowronski, a credit card analyst at Bankrate.