According to the National Retail Federation, about $23 billion is spent on gift cards during the holiday season. The first gift card offered to the public was from the Mobile Company in 1995, according to Thom Aldredge, president of World Gift Card. Gift cards have continued to increase in popularity every year. However, there are pros and cons of giving gift cards.
Pro: Variety. Gift cards can be purchased from almost any retailer both in store and online. Gift cards are available for most clothing retailers, electronic stores, grocery stores, gas stations, bookstores, coffee shops, restaurants and even movie theaters. You can purchase many gift cards online at retailers’ websites.
Pro: General gift cards. Instead of having to purchase a specific store’s gift card, you can look to credit card companies like Visa and Discover for a card that can be used anywhere credit/debit cards are accepted. This allows your recipient flexibility. Most of these cards can be purchased in amounts of $25 to $500.
Pro: Easy to find. Stores like Walmart, Target and Walgreens often have gift card displays near the front checkout lanes. These displays offer gift cards from other retailers and restaurants and can be purchased along with your aspirin, shampoo and birthday card for Aunt Marge.
Pro: Takes away guesswork. More people are appreciative of gift cards because they allow the recipient to choose exactly what he or she wants. To give a gift card, you do not need to know size, favorite color and whether Johnny already has that toy monster truck.
Con: Purchasing fees. When purchasing a bankcard gift card, like a Visa gift card, expect a purchasing fee. For example, it will cost you $3.50 if you purchase a Chase Visa gift card at one of the bank’s branch offices. There is no charge for the card if you purchase it online, but Chase Visa does charge a standard shipping fee of $4.95. Express shipping costs $15.95.
Con: Lost or stolen card fees. If you lose your Wells Fargo Visa gift card, there is a $7.50 replacement fee. The Chase Visa gift card will cost you $12 to replace.
Con: Expiration dates. Just like paper gift certificates, gift cards have expiration dates. Most gift cards are good for one calendar year, from date of purchase, not the date you give the card as a gift. This is important. Be careful not to purchase Christmas gift cards in November because then your recipients will only have 11 months to use the card. Often, a fee charged is each month electronically to the card if a balance still exists after it expires. Chase Visa charges $2.50 per month on remaining balances after the card’s expiration. Some states, such as Massachusetts, have outlawed expiration dates on gift cards, but be sure to know your state’s regulations prior to purchase.