Gift cards: 4 rules for smart shopping

While gift cards top many holiday wish lists this year, givers should note that not all cards are created equal. Some may offend or go unused, while others can cost either buyer or recipient (or both!) more than just their face value.

Consider these 4 rules for smart gift card giving: 

1. Beware of unwanted cards 

To ensure that your gift card doesn't go to waste -- or turn up at a garage sale (or resale site) -- make sure you're buying something the recipient really wants. Based on a post-holiday survey of the most widely resold gift cards, CardCash.com found that gift cards tied to airlines, spa treatments, high-end boutiques and seasonal shops are quite unpopular. Sometimes cash is actually a  better substitute. (For more specifics, check out: 5 gift cards your friends don't want)

2. Keep an eye on fees 

Experts at CardHub.com advise against buying general-purpose gift cards like the Visa gift card or American Express card, because they may carry purchase or other types of fees.  To compare general-purpose cards by fees, check out this chart by Bankrate.com. Many of the cards listed do have, at least, purchase fees of around $4.

3. Know your friends 

The most useful gift cards are the ones that can be redeemed at stores and restaurants your friends and relatives will actually want to visit -- either their favorite restaurants or all-purpose stores and websites like Costco, Target or Amazon.com. If you know the recipient's tastes, get gift cards for a local retailer -- it's both convenient and more thoughtful. At Giftly.com, you can even create a unique gift card for up to 3 local businesses based on the recipient's town or zip code. Eligible businesses include those found in Yelp's 2 million+ database.  

4. Choose replaceable or refundable cards

Gift card recipients will appreciate cards that can be replaced or refunded in the event of a loss or theft. But not all retailers will cover a lost card -- Bankrate's 2011 gift card survey cites Amazon, Costco, iTunes and T.J. Maxx/Marshalls. Regardless, always read the fine print before buying.

Mobile gift cards: The next big trend?
Mobile gift cards: The next big trend?" />

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    Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at www.farnoosh.tv and on Twitter at @farnoosh.

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