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Warning!

Nancys avatarGiving Gift Cards to friends, relatives and co-workers at holidays, birthdays, etc. seem like such a great idea.  The main reason for the popularity is that the giver does not have to take time out of his/her busy schedule to shop.  A couple of clicks on an iPhone and the task is done.  It also solves the age-old problem of what to get the person, especially if the giver does not know the person well.  A gift card to a popular restaurant, a department store, or bookstore sounds like the perfect gift, and will never be turned down by anyone. 

According to the National Retail Federation, the predicted spending on gift cards this year is $28.79 billion.  The United States leads the world in purchasing these cards.  Sounds like a win-win for the giver and the receiver, but hold on.  Some gift cards expire, and some get depleted quickly when a percentage is deducted from the unused amount of the gift card after a specified time.  Sounds like a penalty that is imposed when the card is not used within a specified time frame. 

Retailers love when Gift Cards are not redeemed.  They certainly don’t care if the cardholder “forgot” or “lost it.”  It is more money for them on the debit side of their ledger.  Being aware and reading the fine print is very enlightening, both for the purchaser of the card and the recipient.

FYI:  The Credit Card Accountability, Responsibility and Disclosure (CARD) Act, which took effect in 2010, established standards that give consumers additional protections when using gift cards.

The standards prohibit retailers from setting expiration dates less than five years after the card is purchased and charging dormancy, inactivity, and service fees unless the card has not been used for at least 12 months.

I was holding on to several expired cards without realizing it, but found out their status when I went to use the cards.  Besides feeling very bad for the person who gave them to me, I was mad at myself for not being more diligent about the policies of the cards. 

So bottom line, I would say do not give Gift Cards to people who are not organized and have short memories.  Going back to traditional gift-giving would be an idea for some people on your list.  And don’t forget what we heard a thousand times from our parents.  It is not the gift, it is the thought that counts.

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