Giving Gift Cards

The holidays are approaching and it is always a dilemma to buy for those who have everything. Gift cards can be the solution.

Gift cards are simple to buy, reduce shopping time, and alleviate guess work. They allow the recipient to buy whatever they want or need in a time frame that may take advantage of after-holiday sales.

Because the stigma of cards being the lazy man's gift is gone, and they're readily available from banks, credit card companies, and a variety of retailers, they have become a popular solution. They are also a great gift for the person who may not need anything frivolous but does need the basics like groceries or gas or a splurge like a manicure or spa day.

There are drawbacks, however. They're easy to lose, can be stolen and are often allowed to expire. Fees and restrictions erode their value, and buyers aren't protected by regulations. In a letter to the Federal Trade Commission, Representative Joe Barton wrote "that consumers will be confused by the different rules that retailers have for their cards, and some have been and will be deceived about card restrictions."

To avoid difficulty, buy from a reputable merchant (avoid fraudulent cards often sold on websites). Purchase from a retailer rather than a credit card company to avoid restrictions and purchase fees that range from $2 to $10.95.

Some gift cards carry inactivity fees that reduce card value or maintenance fees (as high as a one-time assessment of $25 or $4.95 a month). Other cards expire in six months, and some merchants tack on a surcharge, which means a $25 gift card could cost you as much as $35. Be informed. Visit www.bankrate.com where all major credit card gifts cards are analyzed.

Consider a gift card from the local pharmacy, hair salon, book store or favorite restaurant. The likelihood for card use is greater.

Explain any restrictions to the recipient, and include the receipt when giving the card. It will be easier to get a replacement if the gift card is lost or stolen.