By Cat Holmes
University of Georgia
Finding the right gift for certain folks can be tricky: How do
you know which books Aunt Sue has already read? For many, a
gift card seems the perfect solution to these dilemmas.
While gift cards have become an increasingly popular gift
choice for the holidays, University of Georgia consumer
economics specialist Michael Rupured warns of some “sneaky
little practices” some companies employ.
Retailers like stored-value gift cards because they’re easier
and cheaper to handle and harder to counterfeit.
Shoppers seem to like them, too. Gift card sales are expected
to increase by as much as 15 percent this year to nearly $45
billion. Whether you’re giving or getting gift cards, be sure
you understand how they work.
There are pros and cons to gift cards. Consumers need to be
aware of these to make informed decisions, Rupured said.
Gift cards, or “stored-value cards,” as Rupured says they are
properly called, look like credit cards, with a magnetized
strip on the back that stores information on how much the card
is worth.
Some cards can be used at the store of purchase, others at
certain malls or shopping centers. Still others can be used
anywhere major credit cards are accepted.
“They’re certainly a very convenient concept,” Rupured
said. “Who remembered to carry around paper gift
certificates?”
However, Rupured notes that when a paper gift certificate was
cashed, any remaining credit was returned to the gift
certificate holder in cash. With gift cards, the unspent
remainder stays on the card until it’s used up, so all of the
money goes to the retailer.
Watch for delayed fees. Some issuers begin charging fees ($1 to
$2.50) after a specified time period if the card hasn’t been
used or used up. These fees may kick in as early as six
months from the date of purchase and can quickly eat up the
value, particularly for low-value ($5-$25) cards.
Consider the cost. Gift cards from major retailers are usually
free. Gift cards that can be used at multiple retailers
sometimes come with a small fee. You may be charged to check
your balance, so be sure to keep track of how much you spend.
Don’t lose the card. If a gift card is lost or stolen, you may
not be able to replace it. Some retailers charge a replacement
fee, provided you have proof of purchase (such as a sales
receipt) and the card’s ID number.
Use the card. About 10 percent of gift cards are never
redeemed. That’s a gift to retailers of more than $4 billion
that you probably didn’t want to give.
(Cat Holmes is a news editor with the University of Georgia
College of Agricultural and Environmental Sciences.)
