It is that time of the year when we may be thinking about, or actually, buying gifts. And, according to the National Retail Federation, gift cards will make up about $25 billion of those gifts. Sometimes they are simply stocking stuffers, but cards are available with very high dollar amounts are not uncommon. Frequently gift cards are considered a “no thought gift” in that they are simply a way of giving money as a gift. But, in some instances they represent a lot of thought and have a specific item in mind to provide choice to the recipient. But, in all honesty, they are frequently picked up from a display stand in a store as a last minute purchase. But these cards can also be part of a scam that is currently being used. I will provide a link to the most common scams at the end of this post.
However, with all card there are some things to consider in order not to waste your precious dollars. First, is there an expiration date? Some Visa and Master Card gift cards do have a one or two year expiration and some even charge a monthly service fee. (Check Bankrate.com for current prices). Second, consider the wasted balance possibilities. If you use most of the money on the card but leave some behind it will be lost. Or, the recipient may have to add money to buy more than they intended. If there is money left behind or the person does not use the card the value will be gone. This is a windfall for the card seller and is called “breakage”. This is free money for the card originator. Third, some companies charge for gift cards. Sometimes it is a direct charge or simply shipping if bought online. Fourth, what happens if the issuing company goes out of business or goes into bankruptcy? Fifth, consider giving what I call a practical gift card for groceries or gas. If friends are struggling financially, these can help and are worth the good will and effort.
The trend here is not necessarily the increase in gift card sales but the possibilities for more scams. Check out the article on Scambusters.org here for the latest and greatest.
However, with all card there are some things to consider in order not to waste your precious dollars. First, is there an expiration date? Some Visa and Master Card gift cards do have a one or two year expiration and some even charge a monthly service fee. (Check Bankrate.com for current prices). Second, consider the wasted balance possibilities. If you use most of the money on the card but leave some behind it will be lost. Or, the recipient may have to add money to buy more than they intended. If there is money left behind or the person does not use the card the value will be gone. This is a windfall for the card seller and is called “breakage”. This is free money for the card originator. Third, some companies charge for gift cards. Sometimes it is a direct charge or simply shipping if bought online. Fourth, what happens if the issuing company goes out of business or goes into bankruptcy? Fifth, consider giving what I call a practical gift card for groceries or gas. If friends are struggling financially, these can help and are worth the good will and effort.
The trend here is not necessarily the increase in gift card sales but the possibilities for more scams. Check out the article on Scambusters.org here for the latest and greatest.
RSS Feed
