RGIS Inventory Blog: Why Gift Cards Still Remain the Most Sought Gift this Holiday

Image designed by the author

They are convenient and fit perfectly into your wallet, no need for that bulky giftwrapping becaue they already come with glossy and attractive designs. They can be eco-friendly as well because you don't have to waste paperboxes or wrappers, so they won't flood your recycle bins. They save you from "shop until you drop" complex especially when you just don't have that enough time to spent. Best of all, you will give the recipient the total freedom to choose what to purchase.

Gift cards, whether they are issued by retail stores or banks are the gifts of choice by many of us in this holiday. According to National Retail Federation, 57% of Americans say that they wish to receive a gift card while 77% plan to buy one this holiday. This year, it estimates that almost $25 Billion worth of gift cards will be spent and is the most sought gift this season.

But, despite their popularity, there are risks and frustrations associated with them as well. Just prior to the signing of the Credit CARD Act in 2009, gift cards and credit cards were once the main subject of consumer complaints due the exorbitant and excessive fees that go along with them, a very short expiration dates, unredeemable balances, etc. If you don't use them quickly or within their expiry dates, you would certainly lose their value.

Another issue: Who will benefit the balance of your unused gift card in case you have not spent all of it? Many if not most of us simply ignore it because after all those were gifts and they are already beyond our control how they will be spent. Well, partly true especially when you were the giver. But how about if you were the recipient and somebody gave you a $50 gift card and the only thing you spent with the card just
prior to its expiration date was the Wii's Just Dance?

Where would the unspent balances go? Either way, balances that are unused or unredeemed from the card will benefit the card issuer whether that issuer was a retail store or a bank. To give you an idea how much they profit from unspent balances, In 2006, TowerGroup, a research firm in Needham, Massachusetts, estimated the value of unused gift cards in the US alone for that year was at $8 billion. Best Buy in that same year also revealed that it profited around $43 million from their gift cards that were not used. I am not going to give the details of the research but I hope you got my point.

And that was 3 or 4 years ago.

Now, thank heavens for the Credit Card Accountability, Responsibility and Disclosure Act of 2009 that eliminate all or at least most of the headaches and frustrations associated with gift cards and credit cards. The bill was signed last May 2009 and was put into effect in February 2010. This holiday will be the first season that the bill will be tested. The goal of this Act is to provide a reasonable protection for consumers from exorbitant fees and unreasonable credit/gift card policies.

Here are some of the provisions among others:

5- year card expiration period. This will protect recipients of gift cards by requiring all gift cards to have at least a five‐year life span, and eliminates the practice of declining values and hidden fees for those cards not used within a reasonable period of time. Any card sold after August 22 of this year cannot expire for 5 years from the purchase date or the last time money was loaded onto it.
No more excessive fees. No more inactivity fees as long as you used it at least once in every 12 months, no more monthly fees. No more hidden fees.
Remaining Balance. You may request The card issuer can to give you another card for your remaining balance free of charge OR request to return the remaining balance.

These new rules do not apply to rebate cards, promotional cards or those purchased at a charity event. Paper gift certificates are also exempt. Also, some states may vary with the rules. Check how it is being applied in your state with this link.

And that gave us greater reasons why gift cards remain to be the gift of choice by many of us.

Important Links:

Shop Your Holiday Gifts at Amazon: