Gift cards not always the perfect giftWritten by Duane Ramsey | | firstname.lastname@example.org
Gift cards may be the most requested gift this year by consumers, but buyers should consider the pros and cons of giving prepaid gift or debit cards, according to the Better Business Bureau (BBB) serving Northwest Ohio and Southeast Michigan.
Whether consumers choose a prepaid gift card or debit card, knowing the risks will help them to avoid unpleasant surprises, according to Dick Eppstein, president and CEO of the local BBB.
“We encourage people to buy gift cards from reputable businesses or retailers, and people who receive gift cards to use them promptly to avoid any potential problems,” Eppstein said.
Gift cards were first on the list of most requested gifts with 55 percent of consumers, according to research conducted for the National Retail Federation (NRF).
The main reason for buying gift cards by 25 percent of respondents was that they allow the recipient to select their own gift. Another 13 percent indicated that gift cards were easier and faster to buy and 6 percent thought they were easier to send than traditional gifts.
Gift cards can only be used to purchase goods or services at the specific retailer, mall or restaurant that issued them. The cardholder can choose when to shop and what to select for purchase.
Many gift cards can be used online and some retailers will refund the remaining balance on a gift card in cash when a purchase is made.
Gift card holders should keep careful track of their cards as refunds are not generally available if the card is lost or stolen.
“The most common problem is people losing gift cards. They should be treated like cash,” Eppstein said.
The main reasons consumers said they would be less likely to buy gift cards were 23 percent felt the cards are impersonal, 11 percent would rather stretch their dollars by buying merchandise on sale and 7 percent simply didn’t know which gift card a person would want.
The federation predicts that Americans will spend $24.9 billion on gift cards this year.
Price-conscious shoppers will take a toll on gift card sales that are expected to fall about 6 percent this holiday season from $26.3 billion spent in 2007.
Fewer people plan to purchase gift cards, and shoppers will be spending less overall on the cards, according to the research.
“Since gift cards never go on sale, some price-conscious shoppers will be passing up gift cards in favor of holiday bargains,” said NRF President and CEO Tracy Mullin. “Fewer people may be redeeming gift cards in January.”
Nearly one in 10 consumers (9.8 percent) said they are discouraged from buying gift cards because they are worried about fees and expiration dates.
Shoppers should be aware there are big differences between store-issued and bank-issued gift or debit cards.
Some debit and gift cards issued by banks and credit card companies are more likely to have expiration dates, activation, maintenance, and transaction fees. Some bank cards even charge a fee for inactivity or checking the balance on the card.
Prepaid debit cards are sold by banks and credit card companies for use wherever the bank or credit card is accepted. Some cards can even be used to withdraw cash from ATMS and to pay bills.
Most prepaid debit cards are not refundable if lost or stolen and upfront fee is charged, in addition to the dollar amount on the card.
According to the NRF, none of the gift cards from the nation’s 25 largest retailers have expiration dates and 84 percent have no fees.
In many states, gift cards that go unredeemed for more than a few years are treated as “abandoned” property. In Ohio, commercial transaction laws require than no gift cards can be sold containing an expiration date that is less than two years after the date the card is issued.
Also within those two years, the card issuer shall not charge service charges or fees relative to the gift card. Such fees reduce the amount for which the holder of the gift card could redeem it.
Shoppers are encouraged to buy gift cards only from reputable retailers and not from online auction or sales sites. Gift cards sold through those sites are more likely to be counterfeit or obtained fraudulently.
“People should be very cautious about buying gift cards over the Internet because there’s a lot of fraud involved with them,” Eppstein said.
A lot of gift cards are left with amounts not used and many small amounts left over often go to waste. In fact, retailers are allowed to start drawing down the money once a card is left with less than five dollars and unused for two years.