The Trouble with Gift Cards

Gift cards can make wonderful gifts. They’re easy to buy, always in the right size and usually well received. But it’s important to understand the problems they can pose for both the giver and the recipient.

Dude, where’s my store?

If you hadn’t noticed, the economy and our retail landscape have changed a lot recently. Some of our favorite shops and restaurants are closing the doors of underperforming locations or worse yet, going out of business completely. Which means if you have a $50 gift card to the Bombay Company, Linens & Things or Bennigan’s, you’ll have a hard time redeeming it. That’s not to say it can’t be done, but you will have to jump through some hoops. For information, go to the company’s Web site first. If that gets you nowhere, contact the Better Business Bureau. But hurry, you may have a limited time to get your money back.

Out of time? Out of luck.

Speaking of time limits, make sure you check the expiration date on any gift card. Many have a window of time in which the card must be redeemed. If the card is not redeemed during that time, you’ll be left with a worthless piece of plastic. 

Did I get the right amount?

Knowing how much to spend on a gift card is essential to giving a worthwhile gift. Spend too little for a card from high-end retailer and you could be seen as cheap. Spending too much can also be a problem. I once received a $200 gift card to a car audio store. I bought a $160-something stereo which left a balance on my card that was too small for anything else in the store and too much to consider inconsequential. The problem was the store wouldn’t provide change for a gift card, so I was left with more than $10 on a card that I would never use again.

When is a $100 not a $100?

While most retailers don’t charge a fee for gift cards, many shopping malls and banks do. So if you plan on giving friends a card they can use anywhere, you should plan on paying a little extra for the convenience. Typical fees associated with purchasing gift cards include:

• ATM usage fee
• Balance inquiry fee
• Customer service fee
• Lost or stolen card replacement fee
• Monthly fee
• Personalization fee

Use anywhere (may not be anywhere, see details for details).

There’s a false assumption that a Visa or MasterCard debit card can be used anywhere Visa or MasterCard credit card is accepted. Unfortunately, there are circumstances when such cards may not be accepted. Some cards (and some vendors) have restrictions which prohibit payment with a debit card. These can include:

• Gas pump purchases
• Recurring bills (such as utility bills)
• Some restaurant purchases
• Some Web site purchase

Nothing says “I didn’t know what to get you” like a gift card.

Some people love gift cards because they know they can find something they want and won’t have to return it. But others may see gift cards as an impersonal gift you got at the last minute at the grocery store. The key to buying gift cards is really the same as buying any gift…know who you’re buying for, know what they want, read the fine print and save your receipts.