The Treasure of Unwanted Gift Cards

By Alec Lindenauer, COR Chief Allowance Officer

As I write this, ‘tis the season. That means aside from holiday cheer, ‘tis the time of year my kids will likely get a gift card or two from someone as a present. A thoughtful someone, no doubt!

But, kids are kids, and just because a gift giver is thoughtful, doesn’t mean my kids will want to shop at that particular store. What to do? And not just during the holiday season, but what should parents keep in mind when unwanted gift cards make their way into our children’s wallets? 

Case in point, when one of my daughters came across a Justice gift card that had been collecting cobwebs in her wallet, she quickly offered, "Dad, I'm too old for that store! What should I do?" Her situation reminded me of an email I received from a COR parent a while back. I’ve amended the email a bit, but essentially that mom wrote:

My kids received Barnes & Noble gift cards for Chanukah from grandpa, and asked if I would buy them for cash. I offered to buy them at a 25% discount because I shop there sometimes. If I can use the B&N gift card, it seems like a helpful and fair real-life lesson to teach them about resale options.   

They also had some Xbox and Nike gift cards, but I said I wouldn’t buy them because I explained that I have no use for those. Curious if you have any guidance on this.

First, there are so many things I love about this email. This mom has her antennae up for teaching moments, and this was a great one. Plus, she nailed the solution. To me, her answer is perfect simply because it’s thoughtful.

As long parents handle this sort of question in a thoughtful manner, rather than ignoring possible teaching moments, they’re on the right path. But, I also saw an opportunity to expand the conversation. Here was my advice: 

I would introduce your kids to Raise.com, or a similar online marketplace for gift cards. Whether you help them list the cards to sell, or use it as a pricing guideline to buy the cards, it should lead to some great conversation. For example, Raise charges you 15% commission if your listed card sells. That's an interesting conversation starter right there. 

Also, where you might offer 25% off the Barnes & Noble card today, your kids might be willing to delay gratification by waiting longer for a bigger payout. If they attempt to sell it online, they'll get less than face value and wait longer ... but they'll likely get more than what you're offering. Either way, a great dialogue is all but guaranteed.

As I often remind parents through workshops and courses, one of our important objectives as Chief Financial Parents is to foster the money dialogue. Offering 25% off face value for a gift card is definitely a way to do that. Online gift card marketplaces offer an array of opportunities to raise the level of that dialogue. 

For example, I used a Starbucks gift card and Raise.com with my daughter to explain Fair Market Value (FMV) … An economic concept I definitely wanted her to learn. Here’s my simple definition, followed by Investopedia’s:

My Definition:
The price people are willing to pay for what you’re selling.

Investopedia’s Definition:
Fair market value (FMV) is the price a product would sell for on the open market assuming that both buyer and seller are reasonably knowledgeable about the asset, are behaving in their own best interests, are free of undue pressure, and are given a reasonable time period for completing the transaction.

Why is it so important for my kids to learn about Fair Market Value? Because sometimes their sense of how much things cost gets warped, and it’s up to me to whip them back into shape. 

When my Frappuccino loving teen was given a $20 Starbucks gift card a while back, she immediately offered me the card, and asked for $20 in cash. 

“Not so fast, my friend,” I said. At first, she couldn’t understand why I wouldn’t want the card. I put it back on her by asking, “Why don’t you keep it?” 

“I’d rather have the $20 in cash,” she quipped. And while she understood why I would rather have 20 bucks too, I still got a teenage eye roll. So I ignored that, and made her an offer consistent with what Raise.com showed, all in the spirit of teaching Fair Market Value. 

She opted for the discounted sale, and thus what could have been a complicated economics lesson for a 12-year-old, was taught in less than a minute. I then took an extra few seconds to explain why I wanted her to understand that things are only worth what people will pay, but that’s all it took.

And while the whole economic principle was taught in a flash, I was able to reinforce the lesson when she found that Justice gift card with cobwebs on it.

The fair market value of a Justice gift card? That’s easy … I didn’t even need to look it up. It’s $0. Justice went bankrupt in 2021. 

Another lesson learned!