When you’re stuck for a gift idea for someone who has everything, giving a gift card might seem just the thing. But consider this —many of those receiving gift cards never use them, according to Consumer Reports ShopSmart.
And even when they are used, fees can chip away at the value of the card.
Rich Handel, a gift card recipient says, “Five years ago I got these from my brother. I still haven’t used them.”
This group of Consumer Reports employees is hardly a scientific sample, but their experiences show why buying gift cards may be a waste of money.
One woman had accumulated dozens of gift cards.
Usha Chari says, “It’s starting to become a burden.
I would rather have cash.”
“Believe it or not, it’s estimated that 1.8 billion dollars worth of gift cards purchased last year are gathering dust and are likely never to be redeemed.” said Anthony Giorgianni of Consumer Reports.
While recent federal legislation requires retailers to honor cards for five years, monthly inactivity fees can kick in after a year … draining the value of the card long before it expires.
“I actually had one gift card where all the money was gone by the time I tried like three years later.” said Olufemi Olu-Lafe, a gift-card recipient.
Gift cards with bank logos like American Express or Visa can be used at a wide variety of stores, but there is often an activation fee or purchase charge, usually around four to six dollars.
“Lost cards are another headache … several big retailers … such as Abercrombie and Fitch, Puma, and Aeropostale, say they won’t replace them. Other retailers may charge you a hefty fee.” said Giorgianni.
For instance, with the Visa Card you can get at Simon Malls, you’ll shell out 15 dollars to replace a lost or stolen card.
Giorgianni said, “One more drawback, don’t expect the same fraud protections you get with traditional credit cards.”
Another reason Consumer Reports says use gift cards as soon as you get them.
If you’re a buying gift cards this season, Consumer Reports says avoid those with purchase fees and keep your receipts in case one gets lost.