Savvy shoppers and consumer-friendly regulations will keep more value on holiday gift cards than ever before, according to researchers at an executive think tank. In a statement to reporters, representatives from CEB TowerGroup Research said that nearly 85 percent of the U.S. population exchanged prepaid gift cards during 2012, for a total of over $110 billion in stored value.

However, as a result of the Credit CARD Act of 2009, retailers and gift card issuers can't pocket leftover funds on most gift cards until at least five years after their last load. CEB's research shows that "gift card spillage" dropped from $8 billion per year in 2007, to just under $1.7 billion in 2012.

CEB TowerGroup officials credit the proliferation of "open loop" gift cards with much of the market's expansion. Bearing Visa, MasterCard, American Express, and Discover logos and redeemable at most retailers, open loop gift cards account for much of the industry's growth over the past five years. Researchers reported that 75 percent of consumers redeem these gift cards in full, while 30 percent of consumers will spend as much as $25 in cash to complement their gift card redemptions.

Research also indicates that physical gift cards remain far more popular among gift-givers than electronic vouchers. E-cards accounted for just $3 billion of the gift card market in 2012, especially as holiday shoppers picked up attractive, last-minute gift card packages at supermarkets, banks, and convenience stores. CEB TowerGroup senior research director Brian Riley told reporters that the "variety and assortment of gift cards available" helped gift givers pick cards that their recipients will actually use.

At this rate, researchers said, the gift card market could top $130 billion in annual sales by 2015, with electronic gift cards accounting for about 15 percent of the industry's revenues. With sustained demand for gift card activations at retail locations, American Express and Chase have expanded plans to use the same channels to support new prepaid debit card products.

Disclaimer: The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we can not guarantee the accuracy of the information in this article. Please verify all terms and conditions of any credit card prior to applying. Check our credit card database for updated terms and conditions.

This content is not provided or commissioned by American Express.  Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express.  This site may be compensated through American Express Affiliate Program.

Disclaimer: This content is not provided or commissioned by Chase.  Opinions expressed here are author’s alone, not those of Chase, and have not been reviewed, approved or otherwise endorsed by Chase.  This site may be compensated through the Chase Affiliate Program.

Discover is a paid advertiser of this site.
Disclaimer: Reasonable efforts are made to maintain accurate information. See the Discover online credit card application for full terms and conditions on offers and rewards.