The Alarming Reason You May Want To Use Your Gift Cards Sooner Rather Than Later

The announcement that iconic store Toys R Us is closing after decades in business made “Toys R Us” kids across the globe pretty nostalgic and sad. The store closing also prompted customers to wonder if they still had time to spend their gift cards before the retailer limped across the finish line.

The short answer is yes, but do it quickly, according to Tom Olk, VP of Risk at Raise. “Your best bet is to spend gift cards right away,” he said to The Cheat Sheet. “Otherwise, if there is value left after the company physically closes, you become an unsecured creditor. In the repayment waterfall, you will be placed behind any secured credit holders, such as debt holders or loan providers. As a result, you would receive only pennies on the dollar…if you even receive that much.”

If the Toys R Us closure were an isolated incident, only toy store gift card holders would need to take note. However other retailers are either completely closing or eliminating stores, according to CNN. So what do you do if you receive a gift card? Spend it immediately? Re-gift it like a hot potato? Here’s what to do if the clock is ticking on your gift card.

1. Check the retailer’s status

Toys 'R' Us

Toys R Us gift card holders need to act fast. | Leon Neal/Getty Images

If you’ve received a gift card go online and check to see if the company filed for Chapter 11 or is closing stores, according to the Better Business Bureau. News reports will typically be readily available to give you a feel of whether you have a viable gift card or not.

Next: Plan to spend your gift card.

2. Put a time limit on the card

gift cards

Misplacing gift cards is easy. | Robyn Beck/AFP/Getty Images

It can be easy to misplace or forget about gift cards, especially if you receive a gift card during a birthday party flurry. Even if the card is not from a store that is closing, you’ll want to park the card in an easy-to-find location and then mark a due date on your calendar. That way you are less likely to forget about it or allow it to expire.

Next: Gift cards don’t last forever.

3. If you don’t use it, you might lose it

two women with loaded carts and their arms full wait in line during Black Friday

Watch out for hidden fees on gift cards.  | Tom Pennington/Getty Images

While you should have at least five years to use your card before it expires, you still may run into headaches if you don’t use it quickly. Retailers may apply inactivity fees or service charges if you don’t use the card within 12 months of purchase, according to AARP. Fees should be included in the card’s disclosure, so scan the paperwork with the card before you make your purchase.

Next: Make this move to protect yourself from fraud.

4. Change the gift card security code ASAP

Hacker at a computer

Hackers might try to steal the cash on your gift card. | Sean Gallup/Getty Images.

Hackers love to commit gift card fraud because it’s pretty easy to do and has some pretty lucrative returns. As a gift card recipient, you can change the security code the minute you receive the card to protect yourself from fraud, according to Consumer Reports. Criminals often try to use a hacked PIN or identification code to make purchases. If you change the code or register the card, it locks the hacker out of your card.

Next: You may still be in luck until the fat lady sings.

5. Try to spend your gift card, even if the store is closing

shoppers carry bags during Black Friday

Even if the store is closing, you should still be able to use your card. | Kena Betancur/Getty Images

Even if the store is in free-fall you may still be able to spend your gift card as long as someone is there to receive the plastic, Debt.org reports. If the store is filing for bankruptcy you may still be able to use your card if the court authorized the store to accept gift cards.

Next: What to do if the fat lady already sang.

6. You may get something from your card if…

The last phase of shopping

If you used your credit card to buy the gift card, you could get a refund. | gpointstudio/Getty Images

If the card was purchased from an outside vendor, such as a drug store or superstore, rather than the merchant directly, you could redeem it for a different gift card of the same value, according to Debt.org. And if you used a credit card to purchase the gift card, you may get a refund. Call your credit card company and explain the situation.

Also, this may sound like a Hail Mary move, but you could even try to use it at a competitor. Who knows, maybe someone will honor it.

Next: Don’t panic if you are out of luck.

7. Never say never

gift cards

You may still want to hang on to that gift card, even if the store has gone out of business. | William Thomas Cain/Getty Images

Although you may feel as though you are hanging onto a worthless piece of plastic, don’t shred your card just yet. If all else fails and you can’t get money from the card, throw it in a drawer, but stay aware of retail news. In some cases companies bounce back from bankruptcy and may accept old gift cards, according to Debt.org.

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