Published on 12/01/09

Read the fine print on gift cards first

By Sharon Dowdy

When it comes to buying a gift for that hard-to-please person on your shopping list, gift cards may be the perfect solution. They are convenient and popular, and many people view them as the next best thing to cash. A University of Georgia expert warns, unlike cash, gift cards can expire and lose their value.

"Different cards come with different terms and conditions related to fees, expiration dates, where you can use them and what happens if they're lost or stolen," said Michael Rupured, a UGA Cooperative Extension financial specialist. "Gift cards are definitely not all created equally. There can be some big differences from one card to another."

Some charge a fee

Some actually cost more money than what they're worth, he said. For example, a $50 gift card can cost $55.

"You've lost $5 from the purchase fee right off the bat with this type of gift card," Rupured said. "Typically, these are the gift cards that can be used at many locations."

Gift cards bought directly from a retailer are usually offered at face value, he said. But they may have different charges associated with them.

A cardholder can be penalized for not using their gift card. Some companies deduct a nonusage fee starting about six months after the card's purchase.

"This is a concern, because many people set gift cards aside and forget about them," Rupured said. "And this fee will continue to be subtracted from the card until its value is depleted."

Other fees can apply

Per-use transaction fees are another possible drawback to using gift cards, he said. This fee is deducted from the gift card if the entire amount isn't used in one transaction.

Rupured said a fee can be charged when you call to check the card’s balance. This could also reduce the face value of some gift cards.

Most of these fees are explained in the card’s fine print.

"All of these fees and terms should be disclosed, perhaps on the card itself," he said. "More often, the fees are explained in a separate document, on a Web site or from a toll-free number."

Just like cash, if you lose a gift card, the person who finds it can pick it up and use it.

Keep a record of the card information

For safety sake, Rupured recommends writing the gift card's unique number on your receipt. Then attach the receipt to the gift card.

"The person you give it to will know how much you've paid," he said. "Now they'll have the information they need to replace it if it's lost."

Even with these downsides, as long as you pay attention to the terms, gift cards can be useful, he said.

"A lot of retailers don't charge any fees for using their gift cards," Rupured said. "And if you have family or friends in different cities, you can give a gift card from a major retailer. Just check to make sure they have the same retailer near by."

Worried? Write a check

If you're leery of gift cards, Rupured suggests giving a personal check.

"There aren't any fees associated with it, and the recipients can get the cash and use it anyway they like,” he said.

Despite your good intentions, your gift card may never be redeemed.

"I recently read that a fifth of all gift cards purchased last year were never redeemed," Rupured said. "Recipients said they either didn't have time to go shopping or couldn't find anything to buy."

Sharon Dowdy is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.