The Checkout

The Latest on Gift Cards

If you're like most Americans, chances are you likely will give and receive plastic in the coming weeks.

Gift card sales are expected to total $24.8 billion this holiday season, a $6 billion increase over 2005, according to the National Retail Federation's fourth annual gift card survey, conducted by BIGresearch.

Plus, the average consumer will spend more on gift cards than they did last year--$116.51 compared with $88.03 in 2005.

We seem to be buying more gift cards despite the hassles that have emerged, such as expiration dates, so-called "dormancy fees" for not using the card, and not being able to use the remaining balance to pay for a portion of a purchase.

In fact, you don't have to wait for the holidays anymore. The cards are in our face year round now by the checkout line at the drugstore and the supermarket.

Lately, gift card issuers have been more responsive to consumer complaints, especially after federal regulators such as the Federal Trade Commission started to crack down on them for possibly misleading consumers.

In August, the Office of the Comptroller of the Currency also told banks to do a better job of disclosing fees on gift cards.

This year, there's another pitfall to watch out for besides the usual fees and fine print: thieves who steal the balance off a gift card before the recipient can use it.

Here's how the scam works, according to

"Scammers write down numbers on the back of gift cards on store racks. After several days, they call an 800 number to find if the card has been activated. If it has, that means it has been sold and is probably under someone's tree. The scammer goes online, using the card to pay for a shopping spree. When the recipient tries to use the card, they learn it has a zero balance."

You're better off buying a card from a retailer that keeps it either behind a counter or online. If you're giving a card, be sure to send the original receipt in case the recipient needs to replace a lost or stolen card. If you're on the receiving end, ask for the receipt.

You may also want to stick with gift cards issued by a retailer instead of a bank.

This year, retailers have tried to remedy complaints about hidden fees and other inconveniences, according to the Montgomery County Office of Consumer Protection.

In the latest update to the agency's excellent gift card report, it said that CompUSA, Hollywood Video, KB Toys, Kmart, Kohl's, and Red Lobster have dropped dormancy fees, while Blockbuster and Macy's have improved their disclosure of expiration dates.

(Kohl and Red Lobster cards may still say they carry dormancy fees, but the companies told the Moco Office of Consumer Protection they wouldn't impose them.)

Banks, by contrast, haven't made as many strides, the report said. They still charge a bunch of fees and they're not doing much better at disclosing them.

The Moco Office of Consumer Protection lists some cards that don't change maintenance fees for one year. They are: the All-Access Visa Gift Card, American Express Gift Card, Discover Gift Card, Simon Mall Visa Gift Card and Washington Mutual MasterCard Gift Card. (The Discover Gift Card is available only to Discover cardholders.)

American Express took a stab at fixing the problem of not being able to use up the balance of a gift card to pay for part of a purchase. The company's advice: Do a "split transaction" by running two transactions with each payment type.

The Moco Office of Consumer Protection gave American Express an A for effort, but noted, "this is hardly the convenience one expects when paying fees for a bank card." Better luck next year, we hope.

For more advice on what to watch out for when you buy--or receive--a gift card, you can go to the FTC or the OCC. Consumer's Union offers a handy guide to state consumer protection laws that govern gift cards.

Alrightee, let's name some names here. Tell me the best and the worst gift cards you've come across so we all know what to keep an eye out for.

By Annys Shin |  November 30, 2006; 8:00 AM ET Consumer Alerts
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Please email us to report offensive comments.

What's up with Webb Pressler's story on A1 today? Isn't this your beat now? Why is she getting the column inches?

Posted by: Phoebe | November 30, 2006 8:38 AM

Personally, I live by the gift card, but I have some relatives that think it's fun to give me many gift cards with small amounts on them. For example, last year my aunt gave me two Starbucks cards for $5 each. This is pointless because you can't really squeeze two drinks out of $5 at Starbucks. But anyway I digress... I love the Starbucks cards (when they have more than $5 on them!) because they swipe efficiently especially on those crowded busy morning rushes. Things like that move the line along.

Posted by: college kid | November 30, 2006 8:45 AM

The fraud problem may be a case of crying wolf. While this is possible, it is not as simple as just writing down the card's code (as explained in the linked article) since you may need a PIN or other information that should be masked. Finding this information would require opening the packaging at least a small amount which should be noticeable. Still, people should be aware of this.

Posted by: Lester Burnham | November 30, 2006 9:00 AM

Well, it has now been three weeks since the Washington Post has been delivered to my house. The delivery subcontractor still does not acknowledge or return phone calls, and apparently the Washington Post doesn't really care.

Do not bother subscribing to the Washington Post if you live in Lexington Park, MD.

Don't waste your money paying for a product not delivered.

Posted by: Don't Bother | November 30, 2006 9:49 AM

Thank you for this update. After doing a ton of research, I plan to buy my nieces and nephews Navy Federal Credit Union Visa cards. $2.95 purchase fee and no dormany fees for a full 12 months following activation. They can be purchased on line, too, which IMHO is the only way to shop. They're all college kids who need the $$$ and they'll get used up well before the 12 months are up.

Posted by: KiKi | November 30, 2006 10:05 AM

I love gift cards and in my case I use them up way before the expiration date. Love those Barnes & Noble cards and restaurant cards! FYI, when I buy gift certificates at Omaha Steaks, they tell me if the recipient doesn't use it within a year, the buyer (me) gets the money back. Good deal, but the recipients always buy their steaks within the year, darnit.

Note to Chris re: refrigerator door. The repairman tells me the door is warped and will have to be replaced. It's a special order door and takes 3 weeks, so I'm going to bite the bullet and get a new fridge. This Kenmore model has given me a lot of problems over the years anyway, so the new fridge will NOT be a Kenmore.

Posted by: Southern Maryland | November 30, 2006 11:18 AM

Or your state could be like Washington, where our legislature passed a law prohibiting expiration dates on gift cards and requiring stores to give you cash if there's less than five dollars left on the card after you have made your purchase.
This law works great - we found a $50 Macy's gift certificate at my mom's house last year which was more than two years old - I took it to the store and got the full $50 value after they checked their computer records to see if the card had been used at all. This is especially impressive because the card was originally issued by the store when it was Bon Macy's, before it became a full blown Macy's.
The solution to this problem is to stop waiting for retailers to do the right thing and get your legislatures to act.

Posted by: The Other Washington | November 30, 2006 11:38 AM

This is not about a gift card, but rather a Visa rebate debit card from Cingular that acts like some gift cards...because most of the amount has been used and the balance is under $10 it has become impossible to use the remainder of MY money. Either becuase of minimums on credit card purchases or businesses that authorize above the current balance I can't buy anything. Why would a check have been so hard? Is it just because they wanted to keep MY money?

Posted by: Austin, TX | November 30, 2006 12:20 PM

When I worked at Borders, we sold a lot of gift cards. A transaction could easily be split between gift card and another method of payment if the gift card did not have enough money on it. No expiration or dormancy charges either.

Posted by: former cashier | November 30, 2006 12:34 PM

One thing I have never liked is the Hair Cuttery gift certificate deal - they can only do them in increments of $10, plus they are just receipt paper. This makes them very difficult to keep track of, and often get thrown away with other misc. paper.

Posted by: college kid | November 30, 2006 12:37 PM

They should renamed visa's to the no access gift card. What a piece of junk. I hate the fact you can't use the card to pay off fractional purchases, So much for the so called access. Worthless company, worthless card.

Posted by: I hate the bank gift cards | November 30, 2006 1:26 PM

I despise gift cards. Not because of fees and fraud but I feel let down if I get one - like the person didn't think I was worth the time/thought/effort required to find a gift just for me! Now when I left my job to return to school I got a OfficeDepot card which was nice and appropriate, but not very special. Then there's a certain person who gives a wal-mart card every year - sooo boring, why bother? So I can think fondly of them while I buy shampoo and kitty litter? Anyway, as for the Visa and such debit gift cards - why not just give cash?? It's the same thing and doesn't cost anything. (New) money at least smells good and makes that nice crinkling sound.

Posted by: Impersonal Gift Cards | November 30, 2006 3:32 PM

I think people give gift cards to make themselves feel better about the tackiness of giving money because they can't figure out what the recipient would want. Banks have figured out how to turn people's insecurity into a revenue stream. I can't believe that anyone falls for it.

Even the gift cards offered by retailers are pretty lame. It's like saying, "I have no idea what you want, but I think you might like being forced to spend the money I'm giving you at this particular store." If you really don't know what someone wants, what makes you think you know where they'll want it?

It's real simple. If you want to give some kind of money to someone you're going to see in person over the holidays, nothing beats cash for convenience. I call it the use-anywhere gift certificate. And you needn't go any further than the nearest ATM to get it.

If you want to give money to someone you won't see face-to-face, checks are the way to go. They can be a bit of a pain for the recipient to deposit, and of course it's a pain for the giver to track the liability until it's deposited, but it's safe and free. Sending gift cards through the mail is no better than sending cash.

Posted by: Matt | November 30, 2006 3:58 PM

Hey now, sometimes gift cards are a great idea. My brother is notoriously difficult to shop for, but he makes no secret his love of Red Lobster (for the biscuits, apparently...good figure. I can't stand the place myself). Seeing as he was fresh our of tech school and still searching a for a job, I got him a gift card so he and his girlfriend could enjoy all the biscuits-and presumably some seafood-they could handle for a night. A nice change from ham sandwiches!

iPod cards are a great stocking stuffer from my other younger siblings. I don't keep up with their musical tastes and this way they can choose their own songs. Plus, they're devoted iPod fanatics. Its not like the card goes to waste.

Posted by: Dupont | November 30, 2006 4:09 PM

"It's like saying, "I have no idea what you want, but I think you might like being forced to spend the money I'm giving you at this particular store." If you really don't know what someone wants, what makes you think you know where they'll want it?"

I have to disagree with Matt. For our Christmas exchange, my preferred gift is a Borders or B&N gift card. I usually give the titles of a few books I have been eyeing, but I realize the store may not always have them in stock. Also,, Borders and B&N both have cafes, so I can purchase a book or magazine or cd and use it while I relax in the cafe with something to eat or drink. The cafe purchases can also be made with the giftcard. This year, I have the name of an older teenager who like sportswear, music and video games. I gift card to a sportswear store or a video game outlet he frequents would be very much appreciated versus me picking a style he disliked or a game he didn't like to play. So gift cards can be thoughtful, if you know the types of things the recipient might like. I have another cousin whose name I have who I have no idea what to get her, but I was told that she likes to shop at a specific store for clothes. Problem solved and I save on wrapping paper, too! Also, I never buy gift cards with expiration dates or dormant fees.

I do dislike the bank cards, though. At least with all the gift cards I've had, I could swipe the card first and then use cash or credit for the remainder of the purchase. For the bank cards you have to do the math and use the other form of payment before the card is swiped or it won't go through if the card ahs a low remaining balance.

This year, I am hoping for several book store gift cards. I am hoping my son gets several cards as well as he'd like to purchase a digital camera. While one person may not spring for a $100 camera for him, several people would spring for $20 or $25 gift cards that would help him reach his goal of getting a camera.

Posted by: Good gift cards | November 30, 2006 4:23 PM

I agree with the people who like getting gift cards for christmas. My grandmother absolutely HATES shopping, so I try to make it as easy as possible for her. Plus, she loves it when I come back to see her and show her what she bought me!

Posted by: college kid | November 30, 2006 5:08 PM

I like receiving gift cards, especially to book stores. If I received cash or a check, I would be more likely to do something "responsible" with the money rather than treating myself.

Posted by: lurker | November 30, 2006 5:33 PM

I like receiving gifts, too. It's nice to get something that someone has taken the time to choose for you. I have received gifts that I would not have chosen for myself that turned out to be something I enjoyed.

Posted by: lurker | November 30, 2006 5:38 PM

I only give gift cards (Starbucks, usually) to postal carriers, UPS, etc. For my friends and family, I have to give them something that says I thought a little about them and what they might enjoy.

But, I'm sure many of them would rather get the gift card!

Posted by: NoVa | November 30, 2006 5:50 PM

Lurker's comment is on target!

When my sister's kids were at the difficult age of not knowing what they would want (12-18) I got them Borders or B&N gift cards. That way they could get books, music, or films and not just 'blow it'.

Actually, even though they're older now, they still like those gift cards. They always like an excuse to go buy a book!

Posted by: Rockville | November 30, 2006 6:02 PM

Wachovia Visa Gift Card = worthless. I had to call the company on 3 different occiassions to get the thing activated after also trying online didn't work. Once activated, it showed a zero balance. My friend who bought it for me had to call Wachovia to prove the purchase and get the balance reinstated.
There were hefty balances included with the card they weren't disclosed anywhere that I could see them.
Terrible. I've never had a problem with a retailers gift card but I won't be using bank gift cards again.

Posted by: Bored at work | November 30, 2006 8:00 PM

My gift card is the Best! Carmen Electra Gift Mastercard can be used anywhere Mastercard is accepted worldwide and it has my picture on the front of it :)

Posted by: Carmen Electra | November 30, 2006 10:55 PM

My gift card is the Best! Carmen Electra Gift Mastercard can be used anywhere Mastercard is accepted worldwide and it has my picture on the front of it :)

Posted by: Carmen Electra | November 30, 2006 10:55 PM

It's funny, those who said they liked retailers' gift cards fell into two groups: those who wanted the recipients to spend it on something more responsible (i.e. kids should spend it on books instead of candy and video games or whatever) and those who wanted the recipients to spend it on something less responsible (i.e. adults should spend it on dinner out instead of the electric bill).

In both cases, I suppose I see your point. For some of the people on your list, it might be a really good fit.

I guess the point I wanted to make is to keep an open mind about cash. For some people, cash is the most appropriate gift, so don't be afraid give that just because it looks tacky. If you're even considering one of those Visa gift cards, you should be doing cash or check instead.

I'll use myself as an example. My extended family all seems to think a Best Buy gift card is the best thing for me. Before Internet shopping got so good, that was probably true. But now I'm just sick of going in there. Even though they're probably my favorite brick-and-mortar retailer in their category, it's just galling to buy things there when I know I could often save 30% or so by shopping online.

Also, I make a point of spending all gift money on things that I want, and not just letting it get absorbed into my general operating budget. Then I tell people what I spent their gift money on, and thank them for that.

The best solution I've found to the whole "what do I get these people" problem is to get my family (to the extent possible) to create a wish list on Amazon. It's basically just registering for Christmas, but it gets the job done.

Posted by: Matt | December 1, 2006 11:31 AM

I've been trying to use my Visa debit gift card since October 30, 2006 and I'm giving up and sending it back to my mother (the giftor), with the hope that she can somehow get her money back from the credit union. I went online 3 times, called twice, kept finding a zero balance given and the cardholder's name still being ICUL Service Corp., and was told that the card isn't "funded" until 24 hours after you call or activate online. Well, it's been 24+ days. I just tried to use it at the dentist, the only place where I figured I could do a split transaction. Card declined. Rather embarrassing. Moms everywhere: just send a check!!!!! Thing is,I already bought the item I was going to buy with the gift card, figuring I'd reimburse myself by using the card at the dentist. Now I'm out of pocket for both. Grrrr!!

Posted by: Lily | December 6, 2006 5:12 PM

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