The great gift voucher swizz that means millions of them are worthless

Gift vouchers seem like a great way to give people something we know they'll love - because they'll be able to choose it themselves. However, there are two major problems with vouchers, which mean millions of pounds spent on them will be lost every year.

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Gift vouchers are booming: the market is worth £5.5 billion, and they find their way into the list of the top five most popular gifts every year. They seem like the perfect compromise for someone who you know well enough to identify the best shop for them, but not well enough to actually narrow down a gift.

However, there are two major pitfalls that mean millions of pounds worth of vouchers never get spent.

Out of business

The first is that, as we have discovered in recent years, even household names can go out of business. If a store goes to the wall, they will often keep trading for a period while they try to find a buyer, but by that point they are not obliged to accept vouchers.

When HMV went into administration in January 2013 it initially refused to accept vouchers at all - although it changed its mind later. American Apparel, meanwhile, is currently not accepting gift cards, as it has been placed in administration. Other companies, such as BHS, continued to accept gift vouchers, but only as part payment for items.

Expiry

Even if the business is in fine fettle, you could end up with a worthless voucher, because millions of people have no idea that their gift card is likely to have an expiry date. These tend not to be on the card itself (the date of purchase will be on the gift receipt printed out at the time - but this often doesn't make it to the recipient). The fact that the gift cards expire is usually buried in the small print, so millions of people have no idea they even have an expiry date - let alone when it might be.

Cards can be invalid within just six months of being purchased, so there's a real risk people don't spend them in time. A study by GoCompare found that one in six people had suffered this fate. It also found that four in ten of us are still sitting on unspent cards - with an average value of £65.

Rachel Springall, Finance Expert at Moneyfacts.co.uk points out: "Gift cards are a common Christmas present, but they will cause disappointment if they expire before use. Anyone buying a gift card would be wise to find out exactly when they might expire and make it clear to the recipient. As an example, Ticketmaster gift cards expire in one year, M&S gift cards are valid for two years and Amazon gift cards are valid for ten years after the date of issue."

The government said last year that it was working with retailers to encourage a minimum period of two years before a card expired, so far nothing has emerged - and even when it does we are expecting a voluntary code, rather than anything more meaningful.

Protect yourself

The government is focusing instead on encouraging us to take control.

If you receive a gift voucher at Christmas, a government spokesperson said, you should immediately check the expiry date and the terms and conditions - if it is not clear, ask for clarification and don't be afraid to challenge the retailer if things are still unclear.

It's always better to spend the card sooner rather than later. If you leave it hanging around in your wallet for months you raise the risk of losing it - as well as the risks of the business going under or the card expiring.

If you have a card that has run out, the government suggests that it is worth approaching the retailer and asking for an extension. In some cases they will be flexible, if you're not asking for too much of a stretch.

If you have a card that's nearing its expiry, meanwhile, you should make it a priority to spend it - or consider selling it online (although you'll need to make the expiry date clear in your details).

If you give a gift voucher, meanwhile, you should make sure you have passed on details of the expiry date - although Springall argues: "it might be simpler to give the gift of cash instead."