How to Avoid Those Gift Card Pitfalls

Ponder the attractiveness of this proposed deal. You lend your bank $100. They hold your money for several months and possibly up to a year. Unlike when you borrow money from them, in this instance your bank pays you no interest. To add insult to injury, when they pay you back you see that you receive only $90 with the bank keeping what was your remaining $10. You probably aren't running to sign up for that investment program.

However, many people enter into such an arrangement on a daily basis. Unwittingly, you very well be among them. The above described scenario is what occurs when Americans purchase gift cards. Gift cards can be a convenient solution to many present giving quandaries. However, they also come with a slew of nefarious fees and traps.

Retailers have a love affair with gift cards. This is evidenced by the vigor with which they are advertised. These promotions are especially salient going into the holiday season. This year you would be behooved to become an educated gift card buyer and recipient.

Firstly, as a buyer of a gift card you want to ensure the person to whom you are gifting receives the full value intended. You are not seeking to make a gift to the store. Scrutinize all terms before you buy a given card. Be especially wary of maintenance fees. These fees can appreciably eat away at the card's value should the receiver linger in redeeming the card.

Most important is the card's expiration date. This is what accounts for the 10% of extra profits that accrue to the retailer's bottom line. On average, 10% of gift card balances are rendered worthless through expiration and other fees. Retailers are fully aware of this and hence gleefully push these cards with no abandon. This is hardly attuned to the holiday spirit.

Sometimes the perfect gift card meeting your recipient's desires contains disadvantageous terms. This doesn't entirely preclude its purchase. If you do give a card with high maintenance fees or early expiration dates, then it is incumbent upon you to so warn the person who is receiving it. A note attached to the card prominently pointing out that the card should be used promptly can often prove to increase the value of your gift by ten percent.

The first thing you should do when you receive a gift card is to check all terms. Using a card quickly can never hurt. If you decide to hold it waiting for a given sale event or new product, then it is important you ascertain up front how much that wait will cost you. Ensure the card is spent on you as opposed to inflating the store's profit margin.

Reading a few simple lines of text can save American consumers billions of dollars. Next time you purchase or receive a gift card create a mental vision of the retailer's executives sitting around a large table gloating about the fortune accruing to them from gift card balance "evaporation". If all consumers got smart about gift cards, then those gloats would quickly turn to tears.