What to do with Sears Gift Cards? 2 lessons on Gift Cards
As you know Sears filed for bankruptcy protection this week. Now, any time you have a financial reorganization, great uncertainty can exist - so, if you have a gift card make sure you use it - in fact this is a 2-part lesson for gift cards. The lessons are point out by me. The material is from the Consumers Union the advocate division of Consumer Reports.
In a recent letter - “Sears, Kmart, and Shop Your Way are open for business and ready to serve you,” the retailer posted online in a letter to its customers.
We are honoring customer programs," the letter adds. "Our product warranties, protection agreements, guarantees, Shop Your Way loyalty program, and promotions continue as normal. We continue to sell and accept gift cards, and you can keep earning and using Shop Your Way points.”
The company also says the bankruptcy filing will not affect the Sears Credit Card and Sears MasterCard.
For a recent example of a situation that went south with a retailer all you have to do is look at Toys 'R' Us
In March, the toy retailer announced it was liquidating its 735 stores after attempting to reorganize under bankruptcy protection. As part of its liquidation, Toys "R" Us gave its gift card holders just 30 days to redeem their remaining balances before the cards were rendered worthless.
Toys "R" Us customers flocked to stores and to the retailer’s website to buy its rapidly dwindling merchandise.
And though the Sears situation is, for now, different from the one for Toys "R" Us, consumers shouldn't wait to use their Sears gift cards.
“For consumers already holding gift cards: Use them!” says Christina Tetreault, senior staff attorney at Consumers Union, the advocacy division of Consumer Reports. “It’s unclear what the future holds for Sears. But for now, the cards are accepted at Sears stores, so there is no reason to wait and plenty of reasons to use your outstanding Sears gift cards now.”
In the event a liquidation of Sears becomes necessary in the future, you don't want to be stuck with gift cards that would be difficult, if not impossible to redeem.
Also, make sure to check your state consumer protection agency, which may have information and advice. State attorneys general sometimes intervene on gift card holders’ behalf.
Last, keep your eye on the competition. In some cases, they may offer to accept Sears cards or provide a discount for cardholders, as Brookstone did when Sharper Image filed for bankruptcy in 2008.
Steer Clear of Gift Cards
The Toys "R" Us and Sears situations reinforce our standing advice on this subject: Stick with cash and skip the gift cards.
“We’ve always advised giving cash over gift cards, and there’s no reason now would be any different,” Tetreault says. “Cash is rarely forgotten about in the back of a drawer, and it’s accepted just about everywhere.”
Another reason to avoid gift cards altogether is that some merchants won’t replace them if they’re lost or stolen, or they’ll replace the cards only if you register them. And in most states, gift cards can expire after five years.
You should avoid all gift cards, not just ones issued by retailers, Tetreault says. Bank-issued gift cards—those carrying a major credit card company logo, such as American Express, MasterCard, or Visa—come with a major drawback. Although they can be used at any merchant that accepts that brand of card, they typically have fees when you purchase them. And after the first year, they may have additional charges for the cardholder, including monthly service and dormancy fees.
That is good advice - makes total sense to give cash rather than gift cards. Think about it what are the chances of you losing cash versus losing a gift card? We just treat cash better - good article by the Consumers union.