Americans like giving gift cards. The average person planned to give $174 worth of the plastic and cyber gifts last year, up from $163 in 2013, according to the National Retail Federation. Unfortunately, we are not as good at spending what we get. In fact, Americans left millions of dollars worth of gift card value unspent last year. If you're holding onto a few hundred dollars spread across a handful of shiny plastic presents, here's how to liberate your locked up lucre.
Reasons to Stop Giving Gift Cards
The next time you're stumped for a gift to give, resist the temptation to grab a gift card off the rack. Gift cards come with several significant drawbacks:
Most lock recipients into buying from a specific retailer (or group of related retailers such as Gap and Banana Republic), which limits their utility.
Most bank gift cards charge buyers a purchase fee on top of the card balance.
Some bank gift cards also charge a monthly "dormancy fee" if the card is inactive for at least 12 months.
If the issuer goes bankrupt, the value on the gift card may be lost.
Replacing lost or stolen cards may be costly – or impossible.
Unlike with credit cards, gift card holders do not have the right to dispute erroneous or inaccurate charges.
Laws governing gift cards vary by state. The National Conference of State Legislatures providesa comparison of state laws and regulations to help consumers understand their gift card rights. Consumers Union provides a simpler, easier to read chart, too.
Finally, before giving a gift card, be sure to understand the terms and conditions so the recipient isn't burdened with surprises later. After all, the fine print is as much a part of the gift as the balance coded onto the magnetic strip.