Get all the bang for your buck from gift cards
Norma Tharp McDonald of Houston embraces gift cards.
They are, she says, the perfect gift to give and to receive.
“I love getting them and giving them. I like getting them for restaurants like Panera or Starbucks. If I get a $20 Starbucks gift card, that’s five trips,” said McDonald. “And I believe it’s better to give a gift card so that someone can buy exactly what they like, instead of them getting something they don’t want or can’t return.”
She is not alone.
According to the Better Business Bureau, gift card sales reached about $274 billion this year, and one-third of gift cards were purchased during the holiday season.
Data from the National Retail Federation’s 2014 annual survey showed gift cards were the most requested gift item for eight consecutive years.
However, lots of gift cards expire with cash remaining. More than $2 billion in gift card value goes unused every year, the BBB reported.
“Gift cards are always a popular choice for gift givers during the holiday season. While a gift card does allow the recipient freedom to choose what they want, it can unfortunately also create an opportunity for fraudsters to take advantage of unsuspecting consumers,” said Caitlyn Driscoll, public relations director for the Southwestern Pennsylvania BBB. “In addition, every year billions of dollars are spent on gift cards that never end up being used by the recipient.”
Since 2005, consumers have left about $44 billion unused on expired gift cards, according to financial services data from CEB TowerGroup.
So much unspent cash led to the creation of the Credit Card Accountability Responsibility and Disclosure Act four years ago. It provides some protections to consumers who receive gift cards, such as prohibiting gift cards from expiring for at least five years after they are purchased or after they were last loaded with money.
The BBB encourages people to read the fine print associated with gift cards. Some cards charge fees whenever they are used. Other cards charge an activation fee, and some charge a dormancy or maintenance fee and deduct from the gift card’s balance if not used within a year.
Here are tips from Driscoll and the BBB in order to get the most bang for your buck from gift cards.
• As the recipient, put the gift card in a safe place, or in a wallet or purse immediately to avoid misplacing it. Often, money is lost because people throw the cards away or forget about them.
• Spend the gift card sooner rather than later, especially if it is for a smaller business. Sometimes, a gift card is forgotten about for months or even years, and when it is found again, recipients discover the business is closed or the gift card is now worth less than the original amount.
Using a gift card sooner also helps eliminate the threat of scammers who will write down gift card numbers while they are on display and steal the money by periodically calling the number listed on the back of the card to verify when it was purchased or activated, Driscoll said. Once the card is activated, a thief can make online or over-the-phone purchases without actually needing the card in hand.
• Only buy gift cards secured behind customer service desks and/or have protected scratch-off security codes. Check a gift card before you purchase it – if the security code was already scratched off, that’s a red flag.
• Avoid purchasing gift cards from disreputable third parties or online auction sites that may be selling counterfeit or fraudulent gift cards.
What if you get a gift card to a store or restaurant that you don’t like?
Companies such as CardHub offer websites to allow people exchange or even sell gift cards they received but have no interest in using.
Wal-Mart is offering a promotion allowing customers to exchange unwanted gift cards for a Wal-Mart “e-card.”
The offer includes more than 200 retailers, but don’t expect to get the card’s full value.
For example, Wal-Mart will give you $96.60 for a $100 Target gift card. A $100 Best Buy gift card will get you $92.40. A $100 Gamestop gift card yields $87.15, while $100 in Starbucks gets you $72.45 from Wal-Mart.
For most, though, including Lori Kubincanek of Fredericktown, a gift card does the trick.
“I love gift cards,” said Kubincanek. “This way, I get to go shopping and I get to take my time and select what I want. It is a day out for me.”