Gift cards may seem like the no-brainer last minute gift when you don’t know what to get that special someone on your list. They have been topping gift lists for the eight consecutive time. According to the National Retail Federation, the average person who buys gift cards will spend $172.74, for a total of $31 billion. Even though buying a gift card is quick and simple, it’s important that you’re aware of its risks.
For example, some gift cards come loaded with fees. Bank or mall gift cards offered by VISA, MasterCard and American Express will carry fees up to $4.95 if you don’t use your card within a certain time frame. If you’re not sure which gift card to purchase, know that these mall and bank gift cards may not seem like a great idea, even though if they’re convenient and accepted by most stores. You wouldn’t want the receiver to pay extra fees when cash is just as sufficient.
You could consider getting that person on your list a store gift card. Anthony Giorgianni of Consumer Reports says that is the next best option to bank or mall gift cards. Sure, you’re restricted to one store, but it won’t cost the receiver any money to use it – or not use it.
“Cards issued by merchants typically don’t have fees like bank cards. But we ding them on convenience since you can use them only at the business on the card.”
Cash may be the best alternative to gift cards. Consumer Reports predicts that $1 billion worth of gift cards will go unspent, and will be left in drawers or wallets instead. Gift cards don’t expire like they used to thanks to new regulations. The money on these cards could last as long as five years, which is what prompts people to hold onto their cards much longer.
There’s also something else to worry about when it comes to gift cards. Both the giver and receiver should be aware that criminals have figured out ways to steal funds off unpurchased gift cards, which will affect the receiver later. Criminals either copy the card’s assigned number or scratch off the silver bar on the backs of gift cards to reveal the hidden security codes. Once the card is loaded with money, the criminals then drain the cards of its funds before it can be used.
If you plan to purchase gift cards this holiday season, experts suggest that you should only buy cards that are stored behind the register, where only the store employees have access to the cards, at the time of purchase. Even better, give them cash or checks. If you happen to receive a gift card, Consumer Reports says to use it up quickly.
[Image Neville Hobson]