All, Savings

Tips on buying gift cards

This holiday season, millions of people will flock to the biggest retailers to get the number one item on everyone’s shopping list. Although you might be thinking Xbox 360 or Playstation 3, Americans will be buying gift cards instead.

I really believe that gift cards make great gifts. As a matter of fact, every year, thousands of people go to retailers like Best Buy, Target, Circuit City, Walmart and others to get gift cards. These gift cards make great Christmas presents for many reasons. This year, 75% of shoppers will buy a gift card. Last year, a whopping $18.5 billion was spent on gift cards alone. While they might seem like the perfect gift for anyone, there could sometimes be hidden issues accompanying them.

To protect yourself, your money, and the gift card recipient, make sure that you consider the following when purchasing gift cards:

Fees:
Many gift cards nowadays come with many different fees. Fees can range from a few cents to a couple of dollars. There are fees for inactivity, fees for checking balances, and fees for certain transactions. Before you purchase the gift card, try to identify the fees. Be especially wary with debit gift cards. They have the highest associated fees out of all gift cards.

Price:
When buying gift cards, try to buy directly from the retailers and not from the credit card issuers. Retailers typically don’t charge fees for purchasing their cards. Credit card issuers, on the other hand, do charge fees for purchasing gift cards.

Protection:
Many gift cards do not offer protection if the card is lost or stolen. Before you buy a gift card, find out if there is some sort of protection available. The last thing you want to find out is that little Jimmy lost his card with the $20 you put in there. Also find out the fee for getting a new card.

Also, keep in mind that 5-10% of all gift cards purchased are never put to use. As a matter of fact, my wonderful girlfriend has yet to redeem a $50 gift card for Gap. Although the numbers are slim, there is still a slight possibility that your present won’t be used.

There is nothing wrong with giving gift cards as a holiday gift. Just make sure that you’re careful when you purchase your card. The last thing you want to do is purchase a card with a high fee, high price and no protection plan.

Merry Christmas.