Public Service Announcement - Do not use gift cards

Just about any store you go into right now is pushing gift cards. Why? Because gift cards are GREAT for retailers. But they aren’t very good for anyone else. For example, here’s a Consumer Alert from the Federal Trade Commission about gift cards:

Buying, Giving, and Using Gift Cards

Here’s a Consumer Advisory from the Comptroller of the Currency:

Consumer Advisory

When you give someone the gift of money (rather than an actual gift), you have two choices: a gift card or cash. Here, in a nut shell, are the problems with gift cards:

1) Unlike cash, gift cards often have fees, which can include: purchase fees, monthly fees, inactivity fees, transaction fees and other random fees that retailers make up out of the blue like balance inquiry fees, etc.

2) Unlike cash, many gift cards have expiration dates.

3) Unlike cash, gift cards restrict where you can use the card. And if you want to turn the card into cash so you can eliminate this restriction, many gift cards will either blow you off or charge a fee.

4) Unlike cash, gift cards can become worthless if the retailer goes out of business or changes the rules.

5) Unlike cash, gift cards are prone to scamming.

6) Unlike cash, gift cards are easy to lose. When a person sees cash, he/she KNOWS it is cash. It goes in the wallet and it gets spent. Of if a person sees a check, he/she KNOWS it is a check, and cashes it at the bank (or if not cashed, the gift giver keeps the money). With a gift card, it is a little piece of plastic (often with cutesy pictures on it) that may be lost, misplaced or thrown out because it may not be obvious that it is important.

In addition, gift cards offer none of the protections offered by many credit cards. If you give cash and the recipient purchases with a credit card, those protections are in place.

With all of these potential headaches and pitfalls, why would anyone give a gift card? There is not a single good thing about a gift card compared to cash.

See also:

- Why Gift Cards Are Evil - “A gift card is great. But every moment you don’t use it, Wal-Mart or some other giant retailer is collecting interest on the giver’s cash. When you go to redeem it, chances are you’ll end up spending some of your own coin. And it probably reflects the giver’s implicit criticism of your poor taste and untrustworthiness.”

- Congress Considers New Gift Card Rules - “American Express told me that if they refunded a $50.00 gift card, I would have to pay a $10.00 fee,” Rosalind said. “They sold a card that is not valid where American Express is accepted and now they want to keep 20% of the value because I can’t use the card.”

- ‘Tis better to give, get a gift card with no expiration - “A gift card from your employer is a thoughtful gesture, but it’s also taxable. Gifts of turkeys, hams and umbrellas featuring your company logo aren’t considered compensation because they have minimal value, says Donna LeValley, contributing editor with J.K. Lasser’s Your Income Tax 2006. A gift card, though, is the same as a cash bonus. Whether the card is for $5 for $500, it’s considered income, and you’re expected to pay taxes on it.”

- Gift card scams and Gift card hack

Just say NO to gift cards.

[See previous PSA]