Gift cards are very convenient and popular presents to buy at this time of year. However, it is advisable to choose ones that will be useful to the receiver, have fair terms and conditions, and have reasonable fees.
Many people think that gift cards are like cash or credit/debit cards, but they are not. For example, often gift cards can only be used at certain places and only for some types of transactions, may have complex terms and conditions, and there may be significant costs for the buyer.
My top ten tips for gift cards buyers are:
- Ensure that the card will suit the recipient. For example will it be easy for the recipient to use online or at a particular store or group of stores, and is it for a relevant product/service?
- Check that the terms and conditions are fair and will not be unduly restrictive for the recipient, for example, minimum spends, no change given, or not usable online.
- Consider any expiry dates. These are less of a concern now that most gift cards must have a minimum 3 year expiry period. However some cards have the advantage of no expiry period.
- Consider E-gift cards which are now widely available and used. They have some advantages over plastic, for example they can be bought and delivered online, are less likely to be misplaced or lost, and can be stored on a phone. However, still check that the terms and conditions and fees/costs are OK.
- Check the cost of buying a gift card. These can mount up. For example, there may be a processing or administration fee and if the card will be posted there is likely to be a postage charge.
- Remember that if a gift card is bought with a credit card the transaction may be treated as a cash advance for which the credit card issuer is likely to:
• charge a 2-3% fee
• charge interest immediately and possibly at a higher rate than for a normal purchase
• not give rewards points.
However, if you buy with a credit (or some debit cards) and there are problems using the gift card or with a purchase you may be able to use the card issuer’s “chargeback” service.
- To avoid cash advance fees and interest charges, pay with a debit card or cash and to avoid, or reduce the cost of, other fees, look for gift cards that will still suit the intended recipient but do not have any, or only low, fees.
- You may be able to buy some gift cards at a discount, for example when you are a member of a club, society or rewards scheme.
- In some situations cash may be a better gift because it can be spent anywhere, does not expire, and does not come with any tricky terms and conditions.
- Keep the receipt for any cards bought in case recipients have problems using them.