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Don't get caught holding that gift card; spend it!

By IVAN PENN, The Consumer's Edge
Published November 17, 2007

Make sure you know the details about gift cards before purchasing.

Forget those gift cards! Buy someone a gift instead - or better yet, do some Random Act of Kindness.

Despite the belief that gift cards will resolve all of our gift-giving woes, reality tells another story.

Consumers spent $8-billion last year for gift cards that went unredeemed. That was the finding announced this week by our friends at Consumer Reports.

Gift card sales totaled about $80-billion nationwide in 2006, but consumers left 10 percent, or $8-billion dollars, unused. It seems we as Americans are getting good at blowing billions.

With $8-billion, Florida could give each of its 170,000 teachers a $47,000 raise Talk about well-paid educators!

With $8-billion, we could build 17 Major League Baseball stadiums (Someone tell the Rays their stadium financing problems are solved!).

Consumer Reports points out that gift cards can be easy money for retailers and banks, but lost money for consumers because of fees and expiration dates.

"Gift-givers and recipients alike need to be aware of the pitfalls and make sure that precautions are taken so that the recipient gets the gift and not the retailers," Tod Marks, senior editor at Consumer Reports, said in a statement.

If consumers actually use it, fine. But if they don't, it can mean more for members of the Greedy Family. (And there are some really greedy companies. You know who you are.)

At issue is a problem for Corporate America: Companies cannot count revenue from gift cards until the money on the card is spent.

"For most retailers, that's money off the table," said Scott Krugman, a spokesman for the National Retail Federation.

The good news for Floridians is state lawmakers stepped in this year with legislation banning expiration dates and other fees on gift cards with just a few exceptions, mostly related to corporate and employer giveaways and events.

The law does not apply to the so-called bank gift cards that carry the VISA, American Express or similar logos. Those may still have expiration dates, fees and restrictions.

Florida joined 28 other states with the ban. Even so, that leaves 21 states where you might want to be careful about picking up or using a gift card.

It's not to say there are no circumstances that warrant purchasing a gift card. But gift cards are becoming the rule, rather than the exception.

"It's the most requested gift this holiday season," Krugman said.

Truth be told, we're often too lazy to go find someone a gift; too afraid they won't like it; or in too much of a hurry.

If you must buy a gift card this year, here's the edge, courtesy of Consumer Reports:

~ Read the fine print. Make sure you know the details about the card before you buy it. Bank cards generally can be used at more retailers than store cards, but often are loaded with fees and restrictions.

~ Check the merchant's prices. It's annoying to get a $25 gift card for a store that doesn't sell anything at that price.

~ Spend it quickly. Use the card as soon as possible, especially if it expires or has a maintenance fee.

~ Spend it to the last penny. If the card balance gets so low that there's nothing to buy, ask a merchant to do a split-tender transaction, allowing the remaining card balance for part of the transaction and another form of payment for the rest.

Where's the card?
Whatever happened to those unredeemed gift cards?
A survey by Consumer Reports found:
~ 58 percent of consumers said they did not have time to use the card.
~ 35 percent did not find anything they wanted.
~ 32 percent of those who have unused cards from last holiday season forgot about the cards.
~ 7 percent will never redeem their gird cards from last season because the card is lost or expired.

Ivan Penn can be reached at ipenn@sptimes.com or (727) 892-2332.

[Last modified November 16, 2007, 23:18:42]