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Are Gift Cards a Good Idea For The Holidays?

Are Gift Cards a Good Idea For The Holidays? By Kelly Twedell
Published November 16, 2009
Credit Unions Online
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With Christmas right around the corner many have begun their holiday shopping early. Gift cards seem like an easy solution, and can even be picked up at your nearest grocery store. It would cut down on waiting in line to ship a box of gifts among other inconveniences. However, there are also some downsides to giving or receiving gift cards for the holidays. Unfortunately, dishonest individuals are pedaling fraudulent, counterfeit gift cards online through popular online auctions at what seem like discounted prices. If it seems ‘too good to be true’, it probably is. The Federal Trade Commission (FTC) recommends buying gift cards from reputable sources only. Even if you are purchasing a gift card at your grocery store, ensure that none of the protective stickers have been removed or that the PIN number is not revealed by someone tampering with it and scratching it off. Just in case the gift card is lost or stolen, it is beneficial to provide the recipient with the receipt to verify the card’s purchase. Most providers list a toll-free number to report if a gift card has been lost or stolen. Getting a gift card might seem like the best gift because you can choose exactly what you want to purchase. No more holiday sweaters that you would never pick out for yourself, but don’t forget to keep the gift cards handy so that you don’t forget to use them before they expire. According to ConsumerReports.org, gift card dormancy, or inactivity, fees are beneficial to its respective company’s bottom line because while it’s sitting in your wallet or drawer, the card can lose it value over time. Some states have begun to limit such fees, and in August 2010 the new Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 will begin prohibit charging those fees for gift cards that are less than one year old. Additionally, whether you are the donor or recipient of a gift card pay close attention to the fine print. Check out the terms and conditions, expiration dates, and consider fees that may be deducted from the card, including activation, maintenance or transaction fees. It’s not much of a gift to give someone a $50 gift card and find out later that fees gobbled up most of the amount. There are two types of gift cards: retail gift cards, which are sold by retailers and restaurants and bank gift cards, which carry the logo of a payment card network like Visa or MasterCard and could be used at any location. If you are using gift cards for your favorite coffee shop, be sure to pay close attention to the balances on the receipts that will be listed what is left at the bottom. If you lose track, call the toll-free number on the back and enter the PIN number to find out how much is left. Some stores allow you to get cash back if the balance is under $10. One last tip: the U.S. Postal Service recommends using a double envelope when sending gift cards inside your holiday cards. Gift cards are such a common gift these days, thieves are well aware of this and many complaints have been filed. It seems many envelopes have been swiped, even though tampering with another’s mail is a federal offense. Receipt confirmation or at least a signature is the safest way to go, so you’ll have to stand in line at the post office anyhow, there is no way to avoid that hurdle. On a side note, the new rules for limiting gift card fees does not take effect until January 2010.

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