Gift cards are a top choice; purchase and use them wisely

Tobie Blanchard, Tucker, Jeanette A.  |  12/9/2009 10:33:59 PM

News You Can Use Distributed 12/09/09

When people were asked what they wanted to receive this year, gift cards was the clear winner, according to an LSU AgCenter family economist.

“Gift givers and recipients often consider gift cards to be perfect gift,” Dr. Jeanette Tucker says.

Gift cards allow recipients the option to pick out the exact item, color and size they want and provide givers with one-size-fits-all convenience and easy availability.

Holiday gift card purchases are expected to reach more than $23 billion this year, with more than 77 percent of shoppers purchasing at least one gift card this holiday season, Tucker says.

The National Retailers Federation projects that the average person will spend $139.91 on gift cards this year, down from $147.33 in 2008.

“As a sign of the times, gift recipients can expect cards with lower monetary values this year,” Tucker says, adding the average value per card will be $39.80, compared to $40.54 last year.

What may seem to be the perfect gift also can come with potential risks and costs, she warns. Before buying a stack of gift cards, it is important to recognize are two types –retail gift cards and bank gift cards.

Retail cards are sold by retailers and restaurants and can be used only with those merchants.

“These cards may have an expiration date or a fee for inactivity that is sometimes called a dormancy fee,” Tucker explains.

Bank gift cards carry the logo of a payment network such as one of the major credit card companies. They can be used at any location that accepts those cards.

“Be aware that bank gift cards are likely to carry fees for activation, maintenance or transactions,” Tucker says.

The Federal Trade Commission offers the following suggestions for buying gift cards:

– Buy cards from sources you know and trust. Avoid buying gift cards from online auction sites because the cards may be counterfeit or may have been obtained fraudulently.

– Read the fine print before you buy. If you don’t like the terms and conditions, buy elsewhere.

– Ask about expiration dates and fees when you are buying a card. This information may appear on the card itself, on the accompanying sleeve or envelope or on the issuer’s Web site. If you don’t see it, ask. If the information is separate from the gift card, give it to the recipient with the card to protect the value of the card. Gift cards issued to be redeemed in goods or services provided by the card seller and purchased in Louisiana do not expire for five years.

– Consider purchase fees. Is there fee to buy the card? If you buy the card online or on the phone, is there a fee for shipping and handling? Does expedited delivery cost more?

– Consider fees that may be deducted from the value of the card, including activation, maintenance or transaction fees. Gift cards issued to be redeemed in goods or services provided by the card seller and purchased in Louisiana can have no service fees except for a one-time handling fee of $1.

– Inspect the card before you buy it. Verify that none of the protective stickers have been removed. Also, make sure the codes on the back of the card haven’t been scratched off to reveal a PIN number.

– Give the recipient the original receipt to verify the card’s purchase in case it is lost or stolen.

– Consider the financial condition of the business and whether it has filed for bankruptcy. Cards purchased from troubled businesses may turn out to be worth less than face value. If the business closes stores that are convenient to the recipient, it may be difficult to get to another location to redeem their card.

Lucky gift card recipients also need to plan for wise use of their card. Consider these tips:

– Read the terms and conditions when you get the card and check for expiration dates or any fees.

– If you didn’t receive the card’s terms and conditions, the original purchase receipt or the card’s ID number, ask the giver for them. Then keep them in a safe place.

– Treat the card like cash. If your card is lost or stolen, report it to the issuer immediately. Some issuers don’t replace lost cards, but others may if you pay a fee. If the issuer charges for a replacement card, you’ll likely need to document the purchase and provide the ID number on the card. Most issuers have toll-free numbers for reporting lost or stolen cards.

– Use it or lose it. Use your card as soon as you can. It’s not unusual to misplace gift cards or forget you have them. Using cards early will help you get the full value. Should your card expire before you’ve had a chance to use it or exhaust its value, contact the issuer. They may still honor it, although there may be charge a fee to do so.

If you have a problem with a gift card, contact the store or financial institution that issued it. If you can’t solve the problem at that level, you may want to file a complaint with the appropriate authorities. For cards issued by retailers, contact the Federal Trade Commission at www.ftc.gov or call 877-FTC-HELP. You may also file a complaint with the Louisiana Attorney General, Consumer Protection Section at P.O. Box 94005, Baton Rouge, La., 70804-9005 or call 800-351-4889.

To address problems with cards issued by national banks, contact the U.S. Comptroller of the Currency’s Customer Assistance Group by calling 800-613-6743 or by sending an e-mail to customer.assistance@occ.treas.gov.

For related family economics and consumer topics, click on the Family and Home link on the LSU AgCenter home page at www.lsuagcenter.com. For local information and educational programs, contact the LSU AgCenter office in your parish.

Tobie Blanchard

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