Gift cards have turned into a wonderful way to shop for friends and family during the Christmas season.  It is estimated that 35 billion dollars will be spent this year on gift cards.  So what do you need to know if you buy a gift card or if you get one?

Giving Gift Cards

IF you are going to give the gift of the gift card, also give the gift of terms and conditions.  Make it a point to alert your friend or family member to how the gift card works.  The last thing that most think of when receiving a gift card are the stipulations.  With just about anything in the retail business, the assumption should be that restrictions apply.

Just check the fine print before you wrap up that gift card.  There are three pieces of information to look for in the fine print:

1. Can it be used only online or just in stores or both?
2. What are the fees?  Most gift cards have a fee for purchase as well as a monthly fee when the card is not being used.
3. Does the gift card have an expiration date?  This is a big one.

Receiving Gift Cards

It is estimated that 27% of gift cards go unredeemed.  It is estimated that the value of unused gift cards in the U.S. for 2006 was 8 billion dollars.  Gift cards can be a blessing and a curse. They are great because of the universal appeal.  If it is a Visa or American Express type of card, it can be used anywhere.

There are downsides to receiving gift cards.  You might not know what you want to buy.  You might misplace the card while you are deciding.  You even run the risk of forgetting about it.  I hate to admit this one, but that has happened to me on more than one occasion.

So here are some tips on proper gift card “management”:

1. The minute you get a gift card put it somewhere safe so that it does not get misplaced.  On a hectic Christmas morning, it is easy to misplace it amongst all of the clutter that is produced on a Christmas morning.
2. Read the terms and conditions on the card.
3. Make it a point to redeem the gift card the week following Christmas.  There are incredible after-Christmas sales that will make that gift card go a long way.

I had a lady call in to tell me of her solution to problems with gift cards.  She said, “Just give cash.”  There is a lot of wisdom in that piece of advice.

Copyright © 2007 Prudent Money and Bob Brooks. All rights reserved.