Buzz
The next time you get a gift card, avoid holding onto it for a special event. Don’t let it sit forgotten in a drawer. Use it quickly, or you're essentially giving the company an interest-free loan.
As financial expert JP Koning points out:
Starbucks holds around $1.6 billion in outstanding stored value card liabilities. This includes both physical gift cards in customers’ wallets and the digital balances in the Starbucks Mobile App.* It makes up approximately 6% of the company’s total liabilities.
This is a remarkable figure. Stored value card liabilities represent the money you, loyal Starbucks customer, use to buy your coffee. What you may not realize is that these balances act as a loan to Starbucks. The company doesn't pay any interest on the money held in the Starbucks app or on gift cards. So, as a loyal customer, you're essentially providing the company with an interest-free loan.
I’m sure many people don’t mind that their Starbucks gift card or app balance is functioning as an interest-free loan—which is exactly what Starbucks (and other retailers) hope for. If you load money onto your Starbucks app and forget to spend it, or if you receive a Starbucks card as a gift and never use it, that’s money Starbucks gets without having to provide you with a product of equal value in return.
The same goes for the small remaining balances on gift cards after you try to use them for purchases that are just under the gift card’s value, so you don’t have to pay the difference. That’s money you're voluntarily giving back to the company; essentially, it’s a forgiven loan.
Of course, sometimes it doesn't make sense to use up every last cent of a gift card if it means paying out-of-pocket at a store you rarely visit for something you don't really want or need. In those situations, selling the gift card to someone else might be the better choice (just like real lenders do with real loans).
In summary: use your gift cards as soon as you receive them, just like you’d use your credit card rewards or airline miles right after earning them. (You do use your credit card rewards and airline miles right away, don’t you?) If not, you’re holding onto an interest-free IOU with an expiration date—and that's the kind of loan you want to cash in on as soon as possible.
