Gift cards — buyer beware!

Black Friday is this Friday, and with that the holiday shopping season will kick into high gear. In recent years the gift card has grown in popularity. After all, what’s not to like–you get to pick out your own gift! Well, there’s a bit of a catch when it comes to gift cards. According to this article in the November 21, 2008, edition of the New York Times, consumers will likely spend about $59.9 billion on gift cards from particular stores and restaurants this year. That means these gift cards can only be redeemed from that specific vendor. That wouldn’t be such a problem if the economy weren’t in such a shambles, and so many companies weren’t filing for bankruptcy protection. Once a retailer or restaurant goes out of business, that gift card becomes worthless. Analyst Brian Riley of the TowerGroup estimates that some $100 million in gift cards was lost this year when businesses went under.

So how do you protect yourself? Gift cards from banking institutions such as American Express, Visa, or MasterCard can be spent anywhere, making them a relatively safe bet. In addition, there are some online sites, including leveragecard.com, that offer numerous brands of gift cards, along with a protection clause that states if the specific retailer goes out of business, you can trade in the gift card for a different retailer.

This entry was posted on Monday, November 24th, 2008 at 6:55 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.