Released: November 20, 2007

Avoid gift card pitfalls

Source: Consumer Reports

They seem like a perfect solution to the problem of what to give this holiday season. Gift cards are offered by banks, shopping malls, retailers, airlines, restaurants, hotels, Web sites, and even state parks. And you don’t have to go far to find them--many supermarkets and drugstores display racks of gift cards conveniently near the checkout.

But a card is one gift that can keep on giving … grief. That’s especially true for bank-issued cards, which often saddle recipients with fees, expiration dates, and other gotchas. Retail cards generally aren’t as troublesome but some of them lose value or expire if you don’t use them quickly, depending on laws and regulations in your state.

A national survey of 1,500 consumers done last spring by WSL Strategic Retail, based in New York, found gift-card fees and expiration dates were among the top causes of frustration. And that’s just among people who attempted to use them. Earlier this year, TowerGroup, a research firm in Needham, Mass., estimated the value of unused gift cards in the U.S. at $8 billion for 2006. And in its fiscal 2006 annual report, the retailer Best Buy revealed a $43 million gain from gift cards that were unlikely to be used.

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