Are Gift Cards as Good a Present as They Seem?

gift card

Giving gift cards has become an increasingly popular way of gifting, especially when the giver is unsure about the recipient’s size or preferences. However, if you give someone one of these cards this holiday season, it may have ramifications long after the holiday is over.


Paula Dunne, principal of Contos Dunne Communications, found this out the hard way:

“Macy’s sent me — a platinum cardholder — a promo that caused me to drive 45 minutes in traffic to shop… something I wouldn’t ordinarily do. While in line to pay for three pairs of shoes, I remembered the $6.16 balance on an old gift card in my wallet. I decide to finally use it. However, when Michael the salesman calls Corporate to provide the gift card number, they inform him it has expired and, well, too bad for me. I say to him (loud enough for the person on the other end to hear) “Gift cards don’t expire in California… call your manager”? Corporate finally tells Michael he can make the call to the store manager. He calls; but Ray, the manager, refuses to honor the card.

So here I am, having already paid Macy’s a hefty sum for the shoes, standing resolute, waiting palm outward to receive my $6. I’m flabbergasted no one will honor it. Further, I’m pretty sure they’re breaking the law here in California.

I hang around, make a few calls threatening to do something about it, and after a couple of hours, a lower-level manager appears and agrees to pay me. At that point, they probably needed me to leave. After all, I was empowering other consumers overhearing all this and — God forbid — their staff.

If they give me, someone not so easily intimidated, so much trouble over a paltry $6, I’m certain many consumers are getting bullied into giving up more of their hard earned money”?

While Paula may have been lucky enough to get the outcome she wanted, not every gift card holder is. In many states, gift cards that are unredeemed for a few years are considered abandoned property. In some instances, retailers are required to turn over unused gift card money after two years to state governments, supposedly so that it can be returned to the consumer who purchased the card. However, it usually isn’t, and the state ends up keeping the money.

Then there is the issue of expiration dates and service fees. There are big differences between store-issued and bank-issued gift cards. Many of the cards issued by the big box retailers don’t have expiration dates or fees. But gift cards issued by banks, malls, and credit card companies are more likely to add expiration dates and activation, maintenance, inactivity, and transaction fees. Some bank-issued gift cards even charge for checking the balance.

What happens if the card is lost? The recipient may be able to get a new one if you kept your receipt. Some card issuers allow gift card holders to register their card on the issuer’s website, enabling the cardholder to receive a substitution if they lose or misplace their original card.

This year, the sagging economy is adding a new problem to giving gift cards. If the recipient doesn’t use the card right away, the money may not be there later on if the card issuer declares bankruptcy. Even purchasing a card from a national retailer is no guarantee that your card is protected from the problem, as the recent bankruptcy protection filing by Circuit City proved.

There is a way you can secure the value of your gift. GiftCardRescue has launched a bankruptcy protection policy that will cover customers that purchase gift cards from the company’s web site.
If a customer buys a gift card from GiftCardRescue and the retailer declares bankruptcy within a year after the card was purchased, GiftCardRescue will reimburse the customer for any unused value on the gift card if the card issuer has stopped honoring its cards, provided the claim is submitted within 30 days of the filing.

The company is also re-launching its blog, which will feature updates on retailer bankruptcies. Readers will also find articles about gift card shopping ideas and a weekly list of gift card deals.

If you plan on giving a gift card this holiday season, try to choose one from a retailer that seems to be doing well inspite of the economy. Also, think about keeping the amount on the card small enough to be used for one purchase. You can always send it along with other items like books, CDs, etc., that the recipient might like if you have to increase the value of the gift you are sending.

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