12/14/2011 6:14 PM ET|
7 ways to make the most of gift cards
They make for popular holiday presents, but you want to ensure that you take full advantage of them. For both givers and recipients, these guidelines can help.
Americans love giving gift cards during the holiday season. In fact, gift card sales are expected to reach $100 billion by 2012, according to TowerGroup, a research and advisory firm.
Yet recipients don't always remember to use them.
If you receive a gift card during the holidays, don't let it collect dust. Make it easy to reach for the gift card instead of your hard-earned cash. That means you want it with you when you're likely to be shopping, not at home in your sock drawer, says Hillary Mendelsohn, author of "thepurplebook" series of online shopping guides and founder of thepurplebook.com.
How else can you get the most out of the gift cards you buy or use this holiday season? Here are seven savvy tips.
Mark your calendar
The Credit Card Accountability, Responsibility and Disclosure Act of 2009, or Credit CARD Act, limits some of the fees that gift card issuers can levy. Here's the rundown on the three major protections you need to know about if you're using gift cards:
- Funds on the cards must be good for at least five years. Money added later must also be good for at least five years.
- Issuers generally aren't allowed to charge any fees within the first year after a gift card is purchased. You can be charged a fee to purchase the card or to replace a lost or stolen card.
- After one year, an issuer is limited to one fee per month, says John Breyault, the director of the National Consumers League's Fraud Center.
Make sure you're aware of any fees associated with the cards you receive, says Michelle Jun, a senior attorney with Consumers Union.
Use gift cards within a year of when they were purchased, she adds.
One good way to remember how long you have is to mark your calendar, says Mendelsohn. That way, you won't lose your gift card's value to fees or forgetfulness.
Know the different types of gift cards
Gift cards come in two basic flavors: closed loop, or those specific to one retailer or retailer group, and open loop, or general, network-branded cards that can be used anywhere.
Each has benefits, so it pays to know which one you have or want to give, Breyault says.
With closed-loop cards, offered directly by retailers, there are usually no fees -- either at purchase or later. You'll pay $50 for a $50 gift card.
The downside: If the retailer has no locations nearby or no online shopping site, closed-loop gift cards can make shopping inconvenient. If the store goes under, the card could be worthless.
"Times are tough," Breyault says. "You never know who's going to make it and who's not."
Open-loop gift cards often carry the imprints of major card networks, such as Visa, MasterCard, Discover or American Express. They typically can be used almost anyplace that accepts that brand. The trade-off: Consumers usually pay a fee to buy the card, Breyault says. After the cards are a year old, the issuer could assess other fees.
Pair your gift card with a coupon
Retailers often don't let you combine coupons, says Mendelsohn. But you can combine gift cards with coupons to really leverage your buying power, she says.
"You have free money, and you can use a coupon," says Mendelsohn. "So take advantage of it."
Her tip: Go online and search the retailer's site for either coupons or coupon codes. If the discount doesn't specify "online only," the retailer has to honor it in the store, Mendelsohn says.
And if you have a smartphone, you can carry the online coupon there, just in case you need to show it to the clerk, she says.
Don't buy just because you have a gift card
It seems contradictory: Yes, you want to use that gift card quickly, but you don't want to buy just to buy.
If you really want to make a smart purchase, "wait for something that you actually really need or want," says Mendelsohn.
Still stuck with an aging gift card and don't know what to buy? Or maybe the card isn't to a store you love?
Either re-gift the card or use it to buy a present for someone else, Mendelsohn says. And take the money you free up and treat yourself.
"It's a great way to not spend your own money," she says.
Gift cards also make great tools for saving money toward big purchases, says Mendelsohn, adding that her family used the cards to pay for two computers.
"Particularly with kids," it's a great way to impart the lesson of saving for a goal, she says. "Even though it's a gift card, it really teaches them -- you can accumulate and get something really meaningful."
Share a 'heads-up' with e-gift cards
A new twist on gift cards that is really gaining in popularity? Electronic gift cards, Breyault says.
One problem with e-gift cards? Recipients don't always realize what they are. "A lot of times people will receive it and won't even look at it -- they'll assume it's spam, Mendelsohn says.
"So you can pre-empt that by saying, 'I wanted you to have this on your birthday, and I'm sending it, so watch out for it,'" she says.
Want to ensure an e-gift card reaches its destination? Double-check the recipient's email address, Mendelsohn says. A typo or old address can mean your recipient never gets your e-gift card.
Follow up with a note to confirm it actually arrived and was for the correct amount, she says.
What you might not know: All those protections the Credit CARD Act confers on your gift cards apply to e-gift cards, too, Breyault says.
Yes, Virginia, there are gift card thieves
It's a sad fact: If someone comes up with something cool, someone else figures out how to steal it.
One favorite trick: Scammers copy gift card numbers and check periodically to see if the cards have been activated, says Jay Foley, the principal partner for ID Theft Info Source. When they are, the thieves use the numbers to spend the money loaded on the card.
One way to fight back: Check the balance periodically before you use the card. Some gift card providers allow you to do that through their websites. While you're there, you can also find out what the policies are in cases of loss, theft or fraud.
If you see unexpected activity on your card, report it to the store or the gift card issuer. In some cases, you may also need the receipt from the person who originally paid for the card.
Another strategy: Use the card as soon as you get it, Foley says.
Saving it for something special? Put the pertinent information, plus the receipt (if you have it), in a safe place. If anything happens to the card itself, you have the data you're likely to need if the issuer will replace it.
Keep it fun
"Gift cards are terrific because they allow people to buy what they want," Mendelsohn says. "But a gift card can seem like a thoughtless gift if you don't let them know that you care."
So include a note telling recipients why you wanted them to have this gift, she says. Or get creative with the presentation. Two of her favorites:
- Gifting your child's teacher with a $10 Starbucks gift card? Wrap it in a coffee mug.
- Giving a card to someone who's saving for something special? Print a picture of the goal, and fasten that to the top of the box.
Chances are, Mendelsohn says, there's a very good reason you wanted the recipients to have this particular gift card. It may be for a restaurant, product or store they love or for something they really want to buy. "At least connect the dots for them," she says.
You can be creative with gift cards in many ways, she adds. One of her favorites for bar and bat mitzvah gifts is an inexpensive wallet with a handful of gift cards to favorite places. The gift cards can be for movie theaters, clothing stores, coffee shops, music retailers or computer gaming stores, among other places.
"Kids love that -- it's a treat," Mendelsohn says. "And parents are thrilled."
VIDEO ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
MORE PERSONAL FINANCE SECTIONS & TOOLS