Gift or Gaffe? Interesting Gift Card Facts
December 3rd, 2007 | by rachel |
On more Christmas mornings than not, everyone in my family opened a gift from my grandparents. It always contained a money holder envelope from the bank and crisp, new bills. Even though we knew the gift was coming, it was always fun to get it. It was free money and we could use it for whatever we wanted! Today, gift cards are the more common way to give “free money”. Unfortunately, gift cards are not always “free” and they can carry other restrictions to be aware of. Before giving a gift card this holiday season, read these gift card facts. Some of them may surprise you!
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There are 2 different types of gift cards – “closed loop” and “open loop”. Closed loop cards are for specific stores and locations. Open loop cards are issued by banks (VISA, Mastercard, American Express, Discover) and can be used anywhere those cards are accepted.
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Most “open loop” cards have a purchase fee in addition to the gift amount that is added to the card.
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Retailers promote gift cards in the hope that the recipient will buy something more expensive than the gift card amount. 62% of people redeeming gift cards DO spend more than the value of the card.
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Many online vendors allow gift cards to be registered online to prevent theft/loss and to allow them to be applied to purchases automatically.
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A “gift card mall” is a single location (sometimes a kiosk) that sells gift cards from multiple vendors.
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In 2006, there were approximately $8 billion worth of UNREDEEMED gift cards.
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Many gift cards carry expiration dates.
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In many states, the unused money on unredeemed gift cards is treated as unclaimed property.
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With “open loop” cards, it is possible to pay more to purchase and send the card than the card is worth.
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Gift cards can be swapped and/or sold through gift card exchanges.
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Gift cards are available for making charitable contributions.
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Money from gift card purchases is not placed on a retailer’s financial records until the card is redeemed.
If you are planning to purchase and give gift cards this holiday season, you won’t be alone. Not only are gift cards more common, they are also more popular than ever before. Make sure to understand the details and restrictions of ALL the cards you give and receive. Then, share that information with your gift recipients so they can get the most out of their “free money”!
SOURCES:
Bankrate.com – 2007 Gift Card Survey
Parade Magazine – “Are Gift Cards A Good Idea?”, Nov. 25, 2007
Consumer Reports – “Gift Cards Gotchas”