Gift cards are popular holiday gifts for good reason — they always fit, duplicates are more than welcome and they never need to be exchanged. While they seem like the perfect present, gift cards can often lead to overspending and hidden costs that retailers count on.
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If you’re buying gift cards this season, it’s important to understand how these traps work and how to avoid them. Here are three smart strategies to save money and steer clear of common gift card pitfalls during the holidays.
Quick Take: Why Retailers Can’t Get Enough of Gift Cards
From the standpoint of retailers, the gift card is an ingenious money maker. It’s a completely free tactic that brings new and old customers in the door, gets more eyes on their merchandise and encourages shoppers to spend. Here’s a closer look at how well they work for retailers according to recent reporting from Capital One:
- Americans spend an estimated $300 billion a year on gift cards.
- The global gift card market was valued at approximately $1.24 trillion in 2025 and is expected to reach $2.31 trillion by 2030.
- A significant portion of gift cards go unspent, with the total value of unused gift cards in the U.S. estimated to be around $23 billion.
- About 52% of consumers purchase gift cards for their convenience. Consumers also often spend more than the card’s value, adding an average of $31.75 more to their purchase.
There are virtually no downsides for the retailer who offers gift cards, as consumers are the ones who take the hit. If you received a gift card this holiday season, here are some tips on how to make the most of your store credit and avoid the spending trap.
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1. Use Your Cards Right Away
Even if consumers manage to spend just a few dollars over, those dollars translate to millions in profits, company-wide. Plus, customers who come in just a few dollars under the card’s value are enticed to come back for a repeat visit, where they will surely need to spend more to exhaust the leftover funds on the card.
The easiest way to make sure you don’t forget about your gift card is to use is as soon as possible. Gift cards also don’t protect against inflation, which means they will lose value over time. Use your cards right away to make sure you get every penny of credit you deserve.
2. Trade in Your Smaller Cards
Spending just $5 or $10 at a store is almost impossible, especially in this economy. Turn your small-dollar gift cards in for something better to avoid overspending. Online marketplaces like CardCash, Raise and Gameflip allow consumers to sell their gift cards for cash or trade them with others.
3. Think of the Card as Cash
You are much more likely to pay full price for an item when using a gift card. Like credit cards, gift cards make shoppers feel slightly less attached to the transaction because it doesn’t feel like real money, right?
Well, it’s this type of thinking that causes them to spend more. Think of your card as cash in your pocket to keep you honest about how much you are actually spending.
Morgan Quinn contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: How To Avoid the Gift Card Spending Trap Retailers Love
