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Tips for giving or using gift cards

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Gift cards will be the most popular present under the tree this year with Americans spending almost $32 billion.

But not all gift cards are created equal, and if you're not careful, you could end up with one that's packed with fees or even worthless. Financial professional Kevin Klug with Secure Retirement Solutions has some important information for consumers on how to avoid fakes, fees & fraud.

Before you grab a gift card, there are 4 things to keep in mind:

1. Choose Wisely

Of course, you'll want to pick a gift card that the person you're buying for will actually use. But that's not all that should go into your decision. Some cards may have hidden costs like an inactivity fee if it goes for a year without being used. You should also watch for shipping and handling fees that could be tacked on if you buy the card online. There is a website that compares gift cards based on the fees, how easily you can check your balance, and how easily it can be replaced. For that site, check out a link on srsplans.com.

2. Know Your Source

A popular holiday scam, thieves are now targeting gift cards. 'They steal the cards personalized code. Once the card is purchased and activated, they use the funds electronically, often before the gift is even given. Your best bet is to buy gift cards from a customer service counter instead of a display rack where no one is watching it. Then make sure the cashier scans and activates the card so you know it is valid and has the correct balance. Always buy gift cards from a known and trusted source. Avoid online auction sites, because the cards may be counterfeit or may have been stolen.

3. Check for Tampering

When you pick out a card, check the card to verify no protective stickers have been removed, and the codes on the back of the card haven't been scratched off. If you can see a PIN number on the card, don't buy it. Report any damaged cards to the store.

4. Get an Extra Receipt

Ask for an extra copy - one for you to give with the gift card, and one to keep. A receipt provides extra protection in case the gift card wasn't activated or the magnetic strip is damaged. A receipt also includes the date the card was purchased. Recipients who have the receipt won't have to haggle with retailers who charge fees based on the amount of time the card goes unused.

Q: What if you receive a gift card? Any tips for the receiver?

Register your card if you have the option. It will help protect the balance in case the card is ever lost or stolen. You should also treat the card like cash. Protect a gift card like you would paper money, and use them quickly. Report any lost or stolen cards to the issuer immediately. Some issuers will not replace lost or stolen cards. Others will, but usually for a fee.

Q: How is technology changing the way we give and receive gift cards?

Electronic gift cards are becoming more popular; 59% of gift cards are now available electronically (according to Bankrate.com). An e-gift card works just like a traditional gift card, but instead of a piece of plastic, a code is emailed directly to the recipient. You can then use the code online, or print it out and bring it to the store. The nice thing about an electronic gift card is that the recipient doesn't have to worry about losing it. But make sure you're taking a good look before buying one. They can carry fees just like a traditional gift card.

Q: And don't let your gift card go unused, right?

That's right. A recent study found that $1 billion in gift cards go unused every year, and that money goes right back to the retailer. So, if you have a gift card in your wallet, remember it's just wasted cash unless you put it to use.

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