For the 11th year in a row, the most popular item on holiday wish lists is gift cards. According to a 2017 National Retail Federation Survey, 61 percent of respondents wished for gift cards, while 55 percent listed clothing and accessories and 39 percent would like books, music or movies.
“In the past, gift cards may not have seemed like a very thoughtful gesture,” said Patti Wooten Swanson, consumer sciences advisor with UC Cooperative Extension in San Diego County. “But today, it's what people want.”
Wooten Swanson has a Ph.D. in consumer science from Texas Women's University in Denton, Texas. She is the author of a seven-part series of financial caregiving publications and is co-chair of the UC Agriculture and Natural Resources Money Talks workgroup, which created a Money Talks website that helps teens and young adults learn to manage their finances.
Gift cards are subject to several consumer protection laws. The federal government mandates that retail gift cards (for a specific merchant or company) and bank-issued gift cards are valid for five years from date of purchase. In California, state law stipulates that most gift cards cannot expire or charge a service fee.
A survey by Consumer Reports found that 10 percent of gift card value typically goes unused. The magazine suggests cash or a check are great alternatives, but Wooten Swanson says she still sometimes opts for gift cards.
“Cash can tend to be used for everyday things,” Wooten Swanson said. “If I want my dad to enjoy a meal at his favorite restaurant, I would give a gift card for the specific restaurant.”
Wooten Swanson offers the following suggestions for ensuring successful gift card experiences:
- If you receive a gift card, use it as quickly as possible. If the retailer goes out of business, the card will have no value. “Also, it's easy to misplace or forget about the card,” Wooten Swanson said.
- Consumers' first choice when selecting gift cards should be those offered by specific retail stores (and their affiliates) or restaurants, Wooten Swanson recommends. “Generally, there are no fees for purchasing them either at the retail outlet, online or at a gift card kiosk in the grocery store,” she said. “The card is valid for at least five years and, by law, no inactivity fees can be charged during the first 12 months.”
- Before buying the gift card, Wooten Swanson suggests looking carefully at the back to be sure that the hidden card number that is usually underneath scratch-off ink has not been exposed. “To steal the value on cards, thieves can copy down the hidden code number at the store. After the card is purchased and funded, the thief can use the code for online purchases, making the card worthless for the person who receives the gift,” she said.
- Always include the store receipt in the gift along with the card. If the gift card is lost or stolen, the recipient can call the company to see if it can be replaced.
- Only purchase gift cards from sources you know are reputable. Some websites allow consumers to buy gift cards at a discount and sell unwanted gift cards at an amount below the face value. “You want to be dealing with a known company to be sure you're getting the real thing,” Wooten Swanson said. She recommends consumers interested in discounted gift cards instead visit big box retailers like Costco or Sams Club, where packets of gift cards are available at a discount.
- Carefully read the conditions attached to bank or credit card company gift cards. They can be used almost anywhere the recipient would like to spend the funds, but most charge a fee to purchase the card and, after 12 months of inactivity, can charge a monthly fee by reducing the balance on the card. “This year many restaurants and retailers are reward those who buy the card with a BOGO bonus. The bonus gift cards obtained often do have an expiration date,” Wooten Swanson said. “Some may not be redeemable immediately.”