Play Your (Gift) Cards Right
By Karen Von Der Bruegge
Winter 2008-09
Gift cards once were seen as impersonal presents given by someone who either waited until the last minute or didn’t give it much thought. But they have since become one of the most popular gift items during the holidays, available everywhere from major retail stores to corner gas stations in a wide range of prices.
In fact, gift cards have become so popular that the National Retail Federation estimates that American consumers will spend some $25 billion on them during the 2008 holiday season.
Since servicemembers find themselves far from friends and family, gift cards often are a practical gift-giving choice. Gift cards are easy to include in a greeting card, and location rarely matters since large retailers often allow the card to be used at any of their stores. And since a wide range of companies offers the cards, there’s plenty of variety to allow for purchases both practical and fun.
Pay attention to the fine print, however, since some gift cards include fees, expiration dates and other conditions you may not notice until it’s too late.
A number of additional fees can come with a gift card, either at the time of purchase or when the recipient uses it. Some of these costs include:
Purchase fees are added to the amount of the card when initially purchased. The fee often is factored as a percentage of the card’s total value; others may impose a flat fee. Purchase fees usually are associated with bank-issued cards such as a Visa or MasterCard.
Service and maintenance fees typically are charged each month the card is not fully redeemed. The fee is charged automatically and the recipient likely will not know it until he or she attempts to make a purchase and discovers that the amount is less than anticipated.
Replacement fees are imposed when an issuer charges a fee in the event the card is lost or stolen.
When buying a card, make sure to ask if you or the recipient will be charged any of these (or other) fees. The last thing you want is to give someone a $50 gift card only to find out that it retains only $40 of purchasing power.
The National Retail Federation says 92 percent of its member retailers do not impose expiration dates on their gift cards. Some states maintain laws that restrict them. Still, expiration dates are not a rarity. And since gift cards often languish in a drawer for months before the recipient uses them, it’s vital to check if and when they expire.
Expiration dates may be implemented because the issuer does not consider the purchase of a gift card as an actual sale; the purchase does not count in the company’s sales figures until the holder actually uses the card. So the issuer views an expiration date as a way to get the sale within a guaranteed time frame.
Most people are not concerned about expiration dates since they will not turn down what essentially is free money and a chance to go shopping on someone else’s dime. But expiration dates may pose a higher likelihood of inconvenience if the intended recipient is a member of the armed forces, since a deployment or permanent change of station could make it difficult to go shopping within an allotted period of time.
If you’re giving a gift card, be sure to check for the existence of an expiration date and inform the recipient – especially when giving to a military family member.
Online shopping has exploded in recent years, and that includes buying online gift cards. It’s a convenient purchase for the buyer: just fill out a form, pay for it and an e-mail notification is sent to the recipient that a virtual gift card waiting for them. No need to leave the house and fight the mall crowds!
But before you hit Send, make sure the website is trustworthy. The safest bet when buying an online gift card is to do business only with companies that boast proven track records. Choose a retailer that also maintains actual storefront locations, since the recipient will find it easier to make returns if the item is faulty and resolve disputes if they arise.
None of these considerations should discourage you from buying gift cards for friends and family. But take a few precautions to ensure that you are earning the best deal for your money and the recipient actually will get a card worth the stated value. As a bonus, you enjoy a convenient and easy shopping experience, while the recipient can use the card to buy what he or she truly wants.
Happy holidays!
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Karen Von Der Bruegge is chief marketing officer for Pioneer Financial Services, a division of MidCountry Bank, which provides financial services and education exclusively to the military community. Visit www.pionerservices.com or www.pioneermilitarylending.com.