by Betty Carew

Created on: October 31, 2008

How can you go wrong by giving gift cards for any occasion? Most people think they are the ideal gift. You don't have to worry about the size or the color, they are easy to purchase and great gifts to receive so what's the problem? The problem is gift cards are great ideas but be wary of the pit falls and there are more than you would think. That's why Consumer Reports is launching a campaign to educate the consumer about the drawback of gift cards.

There is money going to waste and it's all in the name of gift cards. In the holiday season of 2006 there was approximately eight million dollars worth of gift cards given and not redeemed. Gift cards are easily lost or forgotten and turn into wasted money for the consumer.

The public was questioned about the use of gift cards and why they weren't used. There was an array of answers such as, they had the gift card and couldn't find time to use it, they couldn't find anything they wanted at the time, they forgot they even had the gift card, they went to use their gift cards but the time limit had run out and some said they had lost the card.

Some gift cards that are purchased come with a very short expiration date. When the person tries to use it they are told it is expired so be careful when you buy gift cards ask questions to avoid any disappointments. Other gift cards come with fees where the consumers are charged for not using it and when you go to use it there is hardly anything left on the gift card to spend. Make sure you know the terms that come with the card you're buying by reading the fine print. It is not wise to purchase a gift card through an online auction. They may be cheaper to purchase online but you could end up the loser. The cards you purchase could be stolen.

You would think this would be easy money for the retailer, which it is. If they sell a gift card one year and it is not used until a year later then the retailer can't enter this in their books until the item is redeemed but they're still holding your money. There is another aspect of gift cards being used right away when it comes to the retailer. When you go to redeem the gift you end up spending more than the gift card is worth and that makes another reason they want them used up as soon as possible.

In some states if a gift card is not redeemed in a certain time period the retailer must turn over that money to the state. During this waiting period the retailer can still come out with a bigger profit on the gift card by holding the money in the bank and collecting interest on it until they have to give it to the state. When you don't use your gift card a lot of people benefit from the gift, everyone but you.

Buying a gift card is easy but there is a lot of thought that has to go into it. Watch out for the pit falls as there are many. Be an informed consumer and make sure the one you're giving the card to know exactly how they work. This could save you and your loved ones a lot of headaches.

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