Gift Cards Keep Giving--But Not Always to You

by Center for Personal Finance editors

To ensure they don't give yet another tacky tie or smelly soap product, many consumers embrace gift cards as a way to avoid the hassles of gift shopping. End of 2003 annual gift card sales were estimated at about $45 billion--up about 18% from 2002, according to Bain & Company, a Boston consulting firm.

Though gift cards are perfect for many occasions, here are some things to watch out for:

Consider fees. There may be a fee for checking your balance as well as a monthly inactivity, maintenance, administrative, or service fee. For example, some store cards deduct $1 per month after 24 months of nonuse. Details about fees generally are on the card itself, on the accompanying sleeve, or on the store's or financial institution's Web site.

Know the types. Visa and MasterCard gift cards can be used anywhere their credit cards are accepted; store cards must be used at the chain that issued them.

Keep the receipt and write down the card's ID number. Some retailers won't replace lost or stolen gift cards, but those that do might require this documentation.

Make sure you use the card. Consumers never redeem about 10% of the money on gift cards. For cards sold in 2003, that adds up to a potential $4 billion for retailers and banks.

November 29, 2004