Released: November 28, 2006

Gift cards with strings attached

Source: Sandra Block, USA Today

For some folks, engaging in hand-to-hand combat over a discounted flat-panel TV is a holiday tradition. Others would rather walk barefoot over hot coals than go anywhere near a mall between Thanksgiving and Christmas.

If you fall into the second category, you may be a fan of gift cards. Gift cards are easy to buy; they don’t need to be wrapped; and they always fit. Americans spent more than $18 billion on gift cards last year, and nobody got hurt. The National Retail Federation estimates that consumers will spend nearly $25 billion on gift cards this holiday season.

But the popularity of gift cards has led to problems. Some cards expire in as little as six months. Others come with inactivity fees that reduce the value of the card if it’s not used within a specific period.

And while most Americans say they like receiving gift cards, a lot of those cards are gathering dust. About 19% of Americans surveyed by Consumer Reports said they still haven’t used gift cards they received during last year’s holiday season. TowerGroup, a consulting firm, estimates that consumers lose nearly $8 billion every year because of unredeemed, lost or expired gift cards.

That’s quite a waste of money.

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