Editorial Policy

In this gift card season, here’s what you need to know

Jo Ellen Meyers Sharp

November 18, 2015

Gift cards as a thank you for your child’s teacher at Thanksgiving. Or a gift card hanging on the Christmas tree. A gift card fits the description of the perfect present to give and receive: It’s convenient for the giver and desired by the recipient.

Gift cards again top the list of “most requested gift items” (nine years running) in the National Retail Federation’s 2015 Gift Card Spending Survey. Nearly six in 10 people surveyed say they would like to receive gift cards.

People also want to give them. About $25.9 billion is expected to be spent on gift cards this holiday season, down from $31.7 billion in 2014. The NRF found that those planning to buy gift cards will spend less on average ($153.08 versus $172.74 in 2014), the first drop since 2009.

What makes gift cards so popular? “People purchasing gift cards are attracted by the ability to customize the card with a theme fitting the intended recipient,” says Bruce D. Sanders, a consumer psychologist and retail consultant in Vacaville, California.

 • Research the fees. For a Visa or American Express gift card that can be used anywhere, there’s usually an upfront activation fee, which means a $25 gift card may cost closer to $30. Also, monthly inactivity penalties may kick in after a year, which reduce the value of the card. Store gift cards usually don’t have activation fees and generally have fewer, if any, penalties.

 • Check for expiration dates. Under federal law, gift cards that can be used anywhere may not expire for five years from the date of purchase or when reloaded with funds. Retailer gift cards may have an expiration date. As the giver and the receiver, always read the fine print on the back of the card for details on restrictions, fees and other rules.

 • Shop around for deals when buying gift cards. Some restaurants and other retailers, especially at the holidays, will offer a $10 gift card as a bonus when you buy a set amount of gift cards. Some online merchants offer cards for sale below face value, especially as bonuses for other purchases.

 • Purchase from a reputable retailer or restaurant, one that looks as if it will be around for a while.

 • Select a store brand gift card only if you know the recipient shops at that retailer.

 • If you don’t know a recipient’s gift card preferences, a bank-based card that can be used anywhere may be a better option.

 • Give the receipt with the card. This helps the recipient verify its purchase if the card is lost or stolen.

 • Check fees and expiration dates: Familiarize yourself with any inactivity fees or expiration dates. Read the card’s fine print.

 • Ask for the original receipt. The receipt is verification of the purchase, and keep the receipt in a safe place. It may come in handy if the card is lost or stolen.

 • Don’t misplace the gift card. Some people advise using gift cards as soon as possible because it’s easy to forget them.

 • Treat the card like cash. If a gift card is lost or stolen, report it. Some issuers will not replace the card, but some will, though usually for a fee.

 • Use an app to manage your gift cards. Gyft.com and cashcards.com are among several companies that have gift-card management apps for smartphones. These apps make it easier to use the cards digitally when shopping, for selling or trading, or sending to friends and family.

 • If you won’t use the card, sell or trade it. Sites, such as cashcard.com, giftcardgranny.com, plasticjungle.com, coupontrade.com and gift.com, can help with this. Some companies will buy your unwanted cards for 80 to 85 cents on the dollar.

At the personal level, gift cards thank the housekeeping crew, help newlyweds furnish their homes, provide a date-night for new parents, and make a donation to a favorite not-for-profit.

Ellen Zachos, author, speaker and former New York City high-rise gardener, says the nice thing about a gift card is you can’t spend it casually.

“I held on to a big gift card for 11 months, then, I bought myself a Vitamix. I would never have splurged on that myself, but I love it. If I’d gotten cash I would have used that to pay bills,” Zachos says. “In fact, I still have one from last Christmas in my wallet. I’m enjoying the possibilities.”

In the business world, gift cards reward employees for a job well done, provide incentives for referrals, acknowledge a client’s relationship, or make amends for poor communication.

Tom Tyler, local manager at Bartlett Tree Experts in the western Chicago suburb of Bolingbrook, Illinois, uses gift cards in two ways. During the holidays, he rewards his crew with Visa gift cards, and Bartlett gives Starbucks cards to customers when a project doesn’t go exactly as expected.

“Of course, we correct the problem,” he says, “but then we give a Starbucks card that shows we care about making things right.” Starbucks is such a popular gift card, that the company has started branding the Bartlett Tree Service logo on the cards. “It’s a reminder of where it came from.”

Gift cards growing in popularity

Gift cards are big business. Gift card sales are pegged to be between $130 billion and $140 billion in 2015, up from $124 billion in 2014, said Elliot Bohm, chief executive officer of cardcash.com, a site where gift cards are bought and sold.

There are two types of gift cards cards — ones backed by card networks, such as Visa or American Express, which can be used anywhere that card is accepted — and retail brand-specific cards, such as those available for Target, Panera Bread or Best Buy.

Consumer interest in retailer gift cards is strong in the United States, Canada and Great Britain, Bloom said, but in most other countries, gift cards that can be used anywhere are preferred.?

Who buys and receives gift cards? The buyers and recipients of gift cards are spread across the age and income spectrum, with women buying more gift cards than men, says Jean Park, product-marketing manager at Gyft.com, which buys, sells and redeems e-cards for about 200 brands.

Retailers like gift cards because consumers tend to spend 20 to 30 percent more than the value of the card, Park says. For instance, a consumer will pay the difference between the $100 blouse she likes and the $75 gift card she has.

Park expects retail-branded cards, such as Amazon, Starbucks and iTunes, to remain popular this holiday season. Restaurant brands, such as Olive Garden, Applebee’s and Chili’s, are popular, too. New this year: Some store racks include cards from Stockpile that allow the recipient to purchase shares in a company.

Year-round gift-card giving

While some people tend to buy gift cards at the holidays or to mark birthdays or other special occasions, saying thank you with gift cards is a year-round practice at Office Evolution in Utah, where American Express gift cards are awarded for referrals.

“We advertise our pay-for-referrals policy to current members and networking contacts,” says Mark Smith, owner of the company that provides ready-to-use office and meeting space in Salt Lake City, Ogden and Centerville. “We give away $25, $50 and $100 gift cards, depending on the plan the referred member signs up for.”

SEE RELATED: What to do if your gift card goes missing, 5 tips for getting the most out of your gift cards

Tags: , , , ,