Are You Being Careful About Gift Cards This Year?

For so many years, the gift card has been the gift of last resort… or sometimes first when you just want an easy solution. But they have disadvantages that are present every year… and potentially more than usual this year.

Gift Card Negatives

1. Companies going under.

If a company files for bankruptcy, they may or may not have to continue honoring their gift cards. It depends on what the court says. Once they close, of course, the card is no good anyhow.

You can try to get around this by only shopping with companies that aren’t currently having going out of business sales, but it’s hard to predict who will be next. The numbers are pretty scary.

2. Some states allow them to expire.

This isn’t allowed in California and several other states, but many states allow companies to put an expiration date on their gift card. Not fair when you think about it, since the company has your money in exchange for a little piece of plastic, but it’s something to be aware of.

3. Fees.

Depending on the rules of the state the card is purchased in, there can be fees as well. Fees for using the card, checking the balance, or even for failing to use the card over a certain time period. Sometimes there’s even a fee for the purchaser in order to activate the card.

4. They can limit options.

If you give someone a gift card, be very sure they can and do enjoy shopping at that particular store. There’s nothing like finding out you have a gift card for a company that doesn’t even exist in your city and doesn’t have an online option.

Then there’s the “sure I can get there, but I hate the selection” problem. Not everyone likes every store.

5. Some people aren’t sure how to handle the balance.

When the card gets down to just a couple of dollars, a lot of people don’t know how to finish it off. It’s easy, but many aren’t comfortable with it.

All you have to do in most stores is give it to the cashier first. They apply the balance to the purchase, then you pay the rest normally. However, many companies count on customers feeling a reluctance to do so, as they get to keep any unspent balances.

6. Some card balances are easily stolen.

Sometimes gift cards on display give away too much of their information. Thieves note this down, then check balances online regularly. When one appears, they spend it online. Make sure the cards you buy hide at least part of the information needed to activate and spend the card.

Gift Card Positives

1. You know the hobby, but not what’s needed.

A gift card can be a great, personal choice if you know someone’s hobby, but not what supplies they need. If you know where they shop, you can get a gift card to that store and they’ll probably be delighted.

2. Easy to send in the mail.

No outrageous shipping fees to send a gift card across the country. On the other hand, you do have to worry about theft. But checks face the same problem in the mail.

3. No waiting for recipient to cash your check.

There’s nothing like finding out that someone took two months or more to cash their holiday gift check. It can really mess up your personal bookkeeping.

4. You can give “experience” gifts.

Very nice when you don’t want to give things. Memberships work in some cases, but if they’re too expensive or unavailable, a gift card for it can work well.

Things to Know Before Buying a Gift Card

1. What state laws apply?

Can the card expire? What about fees?

2. What are the terms and conditions?

Some of these will contradict state law because the same card is sold in many states. You’ll still want to know, so you can figure out what applies.

3. What happens when the purchase is less than the card amount?

Many stores just leave the balance on the card, but a few will give cash back.

4. What happens if the purchase is more than the card amount?

Sometimes this is harder for the store to handle than other times. Some stores will want the gift card first, while others will want it second. If it’s too confusing, the card may be difficult to use.

5. How is the card registered?

This can protect you from gift card thieves who note the information on unsold cards, then try to use them before the legitimate purchaser. If too much of the card information is freely available before purchase, you may end up giving a worthless gift.

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