Gift Cards – The Good, the Bad, and the Ugly

by Ryan Guina

Gift cards are a multi-billion dollar business and one of the most popular gifts for Christmas, birthdays, and other events. It’s easy to see why – some people are notoriously difficult to shop for, and others prefer to do their own shopping. But not all gift cards are created equally.

What to look for when giving gift cards this holiday season

Before making your purchase, you should realize there are pros and cons to giving gift cards: They are convenient and easier to ship than gifts, but they are also impersonal and may come with unpleasant surprises like fees, inactivity costs, and expiration dates. Here are some things to look for before buying gift cards:

Look out for fees! Read the fine print before purchasing gift cards because some of them come with an automatic monthly or annual fee. Some cards may not begin charging fees until a certain amount of time has passed. The fee and time limits vary, but it’s not unusual to hear about a 2% monthly fee, or a flat rate fee of several dollars per month. These fees are more common with third party gift cards and are less common with gift cards for a specific store.

Avoid gift cards with expiration dates! Again, read the fine print before purchasing gift cards and be sure to look for expiration dates. Many store gift cards don’t have expiration dates, nor do other cards like those from American Express.

Where can the card be used? Many gift cards can only be used at certain stores, while other gift cards can be used anywhere. You should also check whether or not store gift cards can be used online as well as in the store because some store cards can only be used in stores. I ran into this problem before and had to wait almost a year before I could use the card because the item I wanted to purchase was only available online. It was frustrating!

What to do with unwanted gift cards

Send them to me. Just kidding! There is a huge secondary market for gift cards and you can buy, sell, and trade gift cards at a discount. You may take a small hit on the face value of the card, but at least you won’t have to worry about not being able to use it. You can read more about buying and selling gift cards.

Which gift cards are the best to purchase or give as gifts?

You want to make sure you get the most out of your gift cards, so the most important thing you want to consider is whether or not the recipient will use the gift card. If you are confident they will use it, then shop for a gift card to their favorite local or online store. Just be sure they will have access to use it. Some of the most popular gift cards include, The iTunes Store, The Apple Store, and Best Buy. You can also go with a non-store branded gift card, such as one that bears the MasterCard, Visa, or American Express logo. These cards can be used at virtually any location that accepts these credit card brands.

Published or updated April 6, 2012.
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{ 6 comments… read them below or add one }

1 Craig Ford

I always seem to find friends who are willing to trade gift cards. This way you avoid the fees of selling the cards online.


2 Ryan

Definitely a great idea, Craig. I’ve also regifted them before, but I usually give them in passing instead of as a formal gift. “I have this gift card I won’t use and thought you might like it.” It’s a nice way to say thanks or let someone know you are thinking about them. ๐Ÿ™‚


3 Financial Samurai

I actually know plenty of retail marketing execs who love selling gift cards due to 1) postive cash conversion cycle, and 2) the amazing ability of consumers to lose the cards or let them expire.

Don’t be lazy folks. Use or lose!


4 Craig

I like getting gift cards because I ask for a store that is exactly what I want. I’d rather not have the surprise and get the wrong item and just take something I can actually use.


5 Manshu

I don’t like getting gift cards because I’d much rather be surprised by gifts ๐Ÿ™‚ but when it comes to giving gifts, I love gift cards ๐Ÿ˜‰


6 Sam Hogg

As a general rule of thumb, retailer specific gift cards almost always have the most consumer protection. Ones issued by credit card companies will generally have fees because they are in the transaction business. Retailers are in the retailing business, so their goals are to sell more product.

State legislatures have also done a great job in recent years to protect consumers from fees and early expirations. You can find the different protections in your state at the National Council of State Legislatures site here:

Finally, many web services have emerged in recent years to help purchase, send, redeem, and swap gift cards without fees., for instance, helps users navigate to retailer cards that can be delivered electronically, and does it completely free of charge. Others can be found in a recent Entrepreneur article here:

Hope this is informative.

Sam Hogg
Founder and CEO,


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