If gift cards are part of your holiday shopping plans this week, you may want to wait; While they can be an easy way to cross someone off your list, do you really know what you're buying... And giving? Ray Hennessey, editor of smartmoney.com, has some tips.
First of all, when you're buying gift cards, beware of high fees. Some retailers will charge you to activate the gift card, and then charge an inactivity fee if it isn't used within a certain period of time. So that gift card you purchased for $25.00 may only be worth a fraction of that amount if the recipient chooses to use it a few months down the road. According to Hennessey, "You don't want it to be eating up your money. You want your gift to give, and stay there."
Along those same lines, make sure you know if the gift card has an expiration date - and when that date is. "Of the 25 billion dollars (that will be spent on gift cards), 15 percent of that - about 3 to 3.5 billion dollars - isn't going to get used this year," says Hennessey. "That's money that's just thrown away." Not every card expires, but many do. Be sure to tell the gift card recipient when and if the card expires, so they know how long they have to use it.
Finally, when shopping for a gift card, be sure that you choose the retailer wisely. Not only do you need to be sure that you're getting a gift card from a store that the recipient patronizes, but you need to be sure you won't lose money in the process. According to Hennessey, "Some of these retailers end up going out of business. They get into financial trouble, and then they don't end up honoring the cards."
So when you're doing your holiday shopping this year, don't ignore gift cards; Just shop wisely and be aware of any fees or expiration dates that apply to any cards you purchase. Also, be sure to buy them from a reputable retailer. Remember, you want to get the most bang for your buck, whether you're buying a gift card or any other type of present for your family and friends this holiday season.
By Erin Petrun