How to Calculate the True Value of Your Gift Cards

Gift cards have become a popular way to show loved ones we care, but have you ever wondered what their true value is? While the face value of a gift card may seem straightforward, there are other factors to consider when determining its true worth. In this post, we’ll explore how to calculate the true value of your gift cards and provide examples to help you understand the process.

Face Value vs. True Value

The face value of a gift card is the amount printed on the card, but this may not reflect its true value. Some gift cards come with fees, expiration dates, or restrictions that can reduce their value. For example, a gift card with a face value of $100 may have a monthly maintenance fee of $5, reducing its true value over time.

Calculating True Value

To calculate the true value of your gift card, consider the following factors:

1. Fees: Check if the gift card comes with any fees, such as maintenance fees, inactivity fees, or redemption fees. Subtract these fees from the face value to get the true value.
2. Expiration Date: If the gift card has an expiration date, consider the time left before it expires. A gift card with a short expiration period may be less valuable than one with a longer or no expiration date.
3. Restrictions: Check if the gift card has any restrictions, such as limited redemption options or minimum purchase requirements. These restrictions can reduce the card’s true value.
4. Discounts and Promotions: If you purchased the gift card at a discount or during a promotion, consider the discounted price when calculating the true value.

Formula to Calculate True Value

Use the following formula to calculate the true Gift card rates.

:

True Value = Face Value – Fees – (Face Value x Expiration Date Factor) – Restrictions Factor

Expiration Date Factor

To calculate the expiration date factor, use the following formula:

Expiration Date Factor = (Number of months until expiration / Total number of months) x Face Value

Restrictions Factor

To calculate the restrictions factor, use the following formula:

Restrictions Factor = (Number of restrictions / Total number of possible redemptions) x Face Value

Examples

Let’s consider a few examples to illustrate how to calculate the true value of a gift card:

Example 1

• Face Value: $50
• Fees: $2 monthly maintenance fee
• Expiration Date: 12 months
• Restrictions: None

True Value = $50 – $2 – ($50 x (12/12)) = $48

Example 2

• Face Value: $100
• Fees: $5 monthly maintenance fee
• Expiration Date: 6 months
• Restrictions: Minimum purchase requirement of $20

True Value = $100 – $5 – ($100 x (6/12)) – ($100 x (1/5)) = $60

Example 3

• Face Value: $25
• Fees: None
• Expiration Date: No expiration date
• Restrictions: Limited redemption options (only redeemable online)

True Value = $25 – 0 – (0) – ($25 x (1/2)) = $12.50

Conclusion

Calculating the true value of your gift cards can help you make informed decisions when buying or selling them. By considering fees, expiration dates, and restrictions, you can determine the true worth of your gift cards and avoid potential losses. Remember, the face value of a gift card may not always reflect its true value, so it’s essential to do your calculations before making a purchase or sale.

Tips and Precautions

• Always check the terms and conditions of the gift card before purchasing.
• Consider the fees and expiration date when buying a gift card.
• Be aware of any restrictions on redemption options.
• Keep track of your gift cards and their expiration dates to avoid losing their value.
• Consider selling your gift cards if you don’t plan to use them before they expire.

By following these tips and understanding how to calculate the true value of your gift cards, you can make the most of your purchases and avoid any potential losses.