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Some people love gift cards, and some people hate them. I've got a foot in both camps, for several reasons: 
  • Gift cards let the recipient choose what he wants.
  • The cards go further when redeemed during post-holiday clearance sales.
  • I don't need/want bath salts or a cheese board, whereas getting a card to a useful store (Walgreens, Safeway) boosts my budget.
  • If I'm given a card I don't want/can't use, I can sell or trade it on the secondary market (more on that below).
  • Sometimes I pass along cards that I receive -- in effect, someone else doing my shopping for me. (Re-gifting is also a controversial subject, but that's for another column.)

That said, I also see the drawbacks:

  • They can seem awfully impersonal.
  • I'm a little glum about the way some people use gift cards to avoid the botheration of shopping. ("Convenience" cited by 20% of the shoppers surveyed by the National Retail Federation.)
  • I often find very nice presents (yay, thrift stores and clearance sales!) for well under the cost of a $20 or even a $10 card.
  • Personally, it can feel odd to have someone know how much I spent on him.

Not that I always pay full freight for gift cards, mind you -- or pay at all.

This holiday season I'm cashing in at least a dozen gift cards from a couple of credit card rewards programs. Trading points for plastic is the best use for many such programs, according to CardHub.com's "8 things to know about gift cards this holiday season." For example, one rewards program requires 10,000 points to get $50 in cash but only 5,000 for a $50 gift card.

Which brings us to a couple of other drawbacks: Your recipient would be required to spend only at that store (unless he sold the card or re-gifted it), and if he did go shopping, he'd probably overspend. Two-thirds of consumers will go over the cards' face value, the article notes, saying, "This is likely due to the same psychological factor that leads consumers to spend more with credit cards than cash: the money somehow seems less real."

Tips for givers (and hopeful receivers)

Love 'em or loathe 'em, you'd better get used to them because gift cards aren't going away. The demand is too great: Just under 60% of us want to find them under the tree, according to that NRF survey. So if you decide to give them or hope to receive them, keep these tips in mind:

Know your cards. "Prepaid cards are not gift cards," as there are some key (and potentially costly) differences between reloadable and merchant gift cards.

Make your wishes known. Sometimes family and friends are honestly stumped as to what you want, and would really like to buy something you will use. If you know they're not the kinds of people irritated by GCs, suggest a few of your favorites. (CardHub.com lets you set up a wish list.) 

Buy on the secondary market. The cards you give will be 3% to 20% cheaper if you buy cards other people didn't want to keep. An aggregator site called GiftCardGranny.com will let you look for the best deals. Note: Some card resellers, such as Cardpool.com and PlasticJungle.com, can be accessed through cash-back shopping sites like Extrabux.com and MrRebates.com.

New life for old scrip. Want to re-gift a card that has hearts or wedding bells on it? Take it to the store and buy a different version. Or use a free site called Gyft.com to send your old scrip as a brand-new e-card. 

Rate the merchants. Gift cards are "only as good as the retailer or restaurant issuing them," writes Jason Notte of TheStreet.com. He suggests checking with the ScripSmart website, which "has no qualms about separating the solid companies from those on shaky ground."

Recoup your card. The CARD Act says a gift card's funds cannot expire until five years have passed since it was issued/had funds loaded on it. But suppose you unearth a gift card from Christmas 2006? According to blogger Liana Arnold's CardHub.com article, most states let you get back at least some of the unused portion via unclaimed property laws. It's an "onerous" process, though, which is why Arnold concludes that people either use or sell their gift cards quickly, to prevent potential loss.

Readers: Are you giving gift cards and/or hoping to get them?

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