’Tis the season … to buy gift cards. But make sure you weigh the pros and cons before going for the plastic.
As the holiday shopping season gets into full swing, many consumers are scratching their heads over what to get one of their friends, co-workers or even family members.
Maybe it’s someone you don’t know that well. Maybe it’s a loved one who’s hard to shop for. Or maybe it’s that someone special who just seems to have everything already. Or maybe you just don’t have time to shop.
Regardless, consumers need an alternative and easy solution, and banks and retailers are only happy to provide one. So millions of Americans will once again give and receive gift cards this holiday season.
Whether issued by retailers or banks, gift cards are the modern version of those old paper gift certificates, but they’re even easier to use. They’re more respectable than giving cash or even a check, but they can be used like a credit or debit card. And, of course, there’s all kinds of pretty designs on the faces of the cards, making them more attractive and fun to give.
But gift cards have their pluses and minuses that shoppers should be aware of, whether they’re the giver or the receiver. Otherwise, the card could prove as disappointing as your aunt’s fruitcake or your cousin’s latkes.
So here’s a look at a few things to keep in mind about gift cards.
• They’re quick, simple and usually easy, both to give and to receive, and they fit inside an envelope, purse or wallet. They’re perfect if you don’t have time to shop or need a last-minute gift. And there’s also no need to deal with gift-wrapping or shipping hassles and costs for large, bulky packages.
• You can buy them almost anywhere, both in stores and banks as well as online. Many supermarkets and drugstores even have revolving displays of gift cards from a host of other businesses available for sale, so you don’t even have to go into the restaurant or electronics store to get a card. That makes them very convenient to buy.
• They’re particularly ideal for distant friends and relatives, since you can also buy them online and have them mailed directly. Some are even virtual gift cards, such as for online use, and some cards can be purchased in different currencies, such as for Amazon.com, which has international retail websites in other countries.
• They eliminate the need to get too specific with your gift. If you don’t know what to get someone or what their size, style, color or fabric preferences are, but know their favorite store, a gift card allows the recipient to decide how they want to spend the money.
• You can avoid duplicating gifts or you can contribute toward something larger if you can’t spend the full amount.
• There’s no need for refunds, returns or exchanges, since the recipient can buy whatever he or she wants. The only limitation is that a retail gift card is only good at that retailer or restaurant, while a Visa, MasterCard, American Express or Discover card is good anywhere those brands are accepted.
• You have a choice of how much to put on the card, with some cards even allowing you to put any amount instead of preset denominations.
• New laws have been passed to protect consumers from abuses. Fees are now prohibited for 12 months, and cards can’t expire for at least five years.
• Although better than cash, they’re still not as personal as an actual gift. And while a bank-issued card is more flexible than a retailer card, it could also signal laziness or a lack of thought on the part of the giver, who couldn’t even come up with a particular place that the recipient likes.
• It clearly shows how much you spent on the gift.
• They can be lost or forgotten about, in a way that actual cash probably won’t, and you can’t get money back from them.
• Some cards have an expiration date, so the recipient has to use them by that date, or the money is lost. The Federal Trade Commission suggests that consumers can ask the store to extend the deadline, but there may be a fee for that.
• If the retailer goes out of business, you’re out of luck.
• Some cards, particularly those issued by banks, carry certain fees, such as for checking the balance or for inactivity, or they may even charge you just to use the card. So make sure you know the rules and fees before you give or use a card. Under federal law, the expiration date and fees must now be printed on the back of the card.
• They’re not always as convenient as cash. While a bank-issued gift card with one of the major credit card brands can be used almost anywhere, a store or restaurant card is limited to that business. And if the card is for a particular store that doesn’t have a location near the recipient, the card is almost pointless.
• They can make the recipient feel obligated to go out and buy something, even if they might otherwise not want to, or not even know themselves. They might also have to spend more money than the card is worth.