Things to consider when purchasing and using gift cards: Part 1
Be a wise consumer when purchasing gift cards.
Purchasing gifts for others can be a difficult task. Shopping takes time and sometimes it is hard to know what the perfect gift is for every person on your list. Gift cards can be a wonderful solution to the gift-giving challenge. Gift cards are fast, convenient and can even help with shopping on a budget since many come in specific monetary increments. However, not all gift cards are the same. The Federal Trade Commission (FTC), which is the nation’s consumer protection agency, encourages consumers to understand the differences between gift card types and offers suggestions on purchasing and using gift cards which will be covered in Part 2.
The two main types of gift cards are retail gift cards and bank gift cards. Retail gift cards are sold by specific retailers and can only be used with those retailers (i.e. chain stores, restaurants, etc.). Bank gift cards carry payment card logos and can be used anywhere where those logos are accepted (i.e. Discover, Master Card, Visa, etc.).
When purchasing gift cards the FTC recommends the following:
- Purchase from sources that you trust and avoid the temptation to purchase them at online auction sites as they may be counterfeit or obtained fraudulently.
- Take time to read all of the terms and conditions. Some cards require a purchase fee, and others may require shipping and handling fees if purchased online or over the phone.
- Are fees deducted every time the card is used?
- Inspect gift cards before purchasing. Make sure that protective stickers have not been removed or that codes have not been scratched and revealed on the back.
- Provide the gift card recipient with your original receipt in the event the card is lost or stolen they have a proof of purchase.
- Other considerations include the financial stability of the retailer selling the gift cards. If a company goes out of business the gift card may be worth less, and if a store closes it may be difficult to find a close alternative to redeem the remaining value on the card.
The next article in this series will highlight suggestions on using gift cards and how to report problems with gift cards. For additional financial resources, visit MI Money Health, part of Michigan State University Extension.