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Got a gift card? Spend it quickly!

Posted by Cheryl Costa  September 18, 2008 10:17 AM

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How many old gift cards are you carrying around in your wallet? And how many are at the back of the drawer in your kitchen? If you are like most people, you probably have a decent number of gift cards hanging around and, while you expect to use them some day, you never seem to get around to it.

But did you know that if a retailer enters bankruptcy proceedings, they probably don't have to honor your gift card even if the store is still open? It might surprise you to know that bankruptcy courts consider gift cards to be loans to the company. If a merchant wants to be able to honor gift cards while it is in bankruptcy proceedings, it has to petition the court to allow such an action. Shoppers can lose the value of the card if the merchant doesn't make the request or if the court denies the request.

Fortunately, these rules might be changing. The Consumers Union filed a petition last week with the Federal Trade Commission to require retailers to honor gift cards as long as the store is still open. For more information on this effort, check out this article in The Baltimore Sun.

The take-away from this story? Get out there and start spending those gift cards. You never know when a company might declare bankruptcy. The Sharper Image and Linens and Things are two high profile retailers who recently declared bankruptcy.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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ABOUT MANAGING YOUR MONEY
Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

About the contributors

D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of CardHub.com, a credit card and gift card marketplace, and WalletHub.com, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

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