Feature Articles:
Miscellaneous
Gift Cards…..the Perfect Present?
Sandra Huston, Ph.D., Consumer and Family Economics, College of Human Environmental Sciences, University of Missouri Extension
It’s crunch time – less than two weeks until Christmas
and you are running out of ideas. Finding the perfect
gift for that special someone on your list can be a
daunting task. Will they like it? Will it fit? What to
do? If this sounds familiar, you may be heading down the
path that leads to the “gift card” solution.
Gift cards are becoming a more popular gift choice.
According to the National Retail Federation’s (NRF) 2004
Gift Card Survey, almost three-quarters of consumers
plan to buy an average of 3 gift cards this holiday
season for an average total expenditure of $110. This
adds up to gift card sales of almost 17.5 billion
dollars, or about 8% of total projected holiday sales.
So, is the gift card the perfect present? It could be,
but here are some things you will want to consider
before making your purchase.
What kind of gift card?
There are retail gift cards, for specific use in a
particular store. Bank gift cards are also becoming
popular – these cards carry the logo of credit, debit,
or charge card companies such as MasterCard, Visa,
Discover, and American Express. They may be issued
directly by the card company or they may be issued by
(and carry the logo of) banks, shopping malls, and other
institutions and offer the attraction and advantage of
being accepted everywhere that type of card is accepted.
Mall cards, however, may be restricted for used only
within the named mall or mall chain – something you
should definitely check before you purchase.
Consumers should understand gift card policies before
purchasing. Results from the NRF’s 2004 Gift Card Survey
are provided to help give you an idea of how some of
these retail gift cards work. This research looked at
gift cards, packaging and inserts, websites, and
policies of 30 major retailers and restaurant chains as
well as 4 bankcard issuers.
Here are some of the important card policy questions to consider:
Retail Cards:
The three most important retail gift card policies for
consumers to consider are:
- Is a replacement card available if the gift card is lost or stolen?
- In the NRF study, 70% of retail gift cards offer the potential to obtain a replacement card if the original is lost or stolen. So, before you purchase a gift card, make sure to find out about this policy.
- Does the gift card have an expiration
date?
- Few gift cards have an absolute expiration date and only one of the retailers studied (Blockbuster) indicated an expiration date after 2 years of non-use.
- Are there any fees associated with
the card balance?
- In the NRF study, 30% of retail gift cards may impose fees if the card is not used much. These “inactivity” fees range from $1-$2.10 per month and usually kick in after 12-24 months of non-use.
- 33% of the cards in the study impose either an expiration date or a potential fee. No card studied imposes both.
- Of the 10 (out of 30) cards studied that do impose an expiration date or potential fee, half of them do not disclose those restrictions pre-purchase in both their stores and websites – so be sure to ask BEFORE you buy!
For a complete table listing detailed
results for the 30 stores studied,
please
click
here.
Missouri House
Bill no.1411 provides
standards for any entity doing business
in Missouri that issues gift
certificates or offers promotional
premiums, coupons, or sales agreements.
Gift certificates must have an
expiration date of at least one year
from the date of purchase and must allow
for a cash redemption of any amount not
redeemed within one year of the
expiration date. Promotional premiums,
coupons, or sales agreements must have
the expiration date printed on them and
must allow for a cash redemption of any
amount not redeemed within two years of
the expiration date. Businesses offering
gift certificates, promotional premiums,
coupons, or sales agreements will be
prohibited from imposing a maintenance
fee or surcharge if the item is not
redeemed within a specific time or if a
cash refund is issued.
Bank Cards:
The NRF study looked at four bank cards:
AAA Visa Gift card (MBNA Bank), Bank of
America Visa Gift Card, American Express
Gift Card, and SureOne Prepaid
MasterCard (Columbus Bank and Trust).
The seemingly attractive features of
bank gift cards come at the price of all
sorts of fees that tend to make them
less attractive than retail gift cards
- All four of the bank cards impost a processing/purchase charge ranging from $3.95 to $11.95
- All four offer replacement cards, but they charge between $1.50 and $2.50 per transaction
- Two of the four cards impose a telephone balance inquiry fee of $0.50 - $2.00
- All four cards have a monthly maintenance fee of $1.25 to $4.95 per month.
- All four cards have an expiration date, but some cards offer to have the remaining balance at expiration returned via a reissued card or a check for a fee of $5.95 to $15.00.
- All four bank cards reserve the right to change the terms and conditions of the card.
So….buyer BEWARE! For a
complete table listing detailed
results for the 4 bank cards
studied, please
click here.
What should you
do?
As a gift card buyer or gift
giver, you want to make sure that
you:
- Find out all the card policies BEFORE you purchase any gift card – look carefully at the pre-purchase disclosures, if terms are not given – do not buy!
- For maximum value to the recipient, consider buying a retail card before selecting a bank gift card.
- Send the original receipt along with the card to the recipient or the recipient’s parent and advise them to keep it in a safe place so they can seek a replacement if the card is lost or stolen
As a gift card recipient,
you want to make sure that you:
- Look at the terms and conditions on the back of a gift card and any paper insert as soon as you receive it. If the card has an expiration or fee commencement date, spend it promptly! Avoid the bank card uses that incur additional fees.
- Set up a family gift card file to retain the original receipts, card numbers, any expiration/fee commencement dates, any inserts with terms and conditions, and toll free customer service numbers.
- Call the toll free number as soon as possible when you notice the card is missing. Even if the card says that replacements are not provided – contact the company anyway if it’s lost or stolen. It does not hurt to ask, and given the increasing competition for gift cards, more companies may be adopting replacement policies.
So, after all of this, are
gift cards really the
perfect present? They sure
can be, especially for the
informed consumer!! Buy
wisely and have a rewarding
holiday season.
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Last update: Monday, April 07, 2008
