Choose your gift cards wisely

Published 9:00 pm Wednesday, December 8, 2004

Can you guess what is the gift purchase of choice this year?

The new Nintendo DS video game system or Microsoft’s Xbox?

Guess again.

Perhaps you thought it was jewelry, which is always a bestseller this time of year.

All those answers would be wrong, according to the 19th annual consumer survey of holiday retail spending plans and trends commissioned by Deloitte &Touche USA LLP.

For the first time since their inception, those little plastic gift cards will replace apparel as the top gift, the firm reported recently.

This year, 64 percent of consumers said they intended to buy gift cards, up from 60 percent in 2003 and double the percentage of consumers who will give a gift of money this holiday season.

In another holiday shopping survey conducted for the National Retail Federation, a little more than half of consumers polled (50.2 percent) said they would like to receive gift cards, up nearly 10 percent from two years ago.

The average person purchasing a gift card this year will buy 3.38 cards for a total of $108.28, according to the National Retail Federation survey.

So what’s driving the gift card trend?

“While there is certainly significant impulse purchasing of gift cards, we are seeing a much larger number of buyers who are purposefully choosing a gift card as a first choice, saying they want to ensure the recipient receives something he or she would enjoy,” said Bob Skiba, executive vice president and general manager of Stored Value Systems, one of the nation’s leading suppliers of gift cards.

I’m not surprised at this trend. Finding the right gift for people these days is harder than finding Osama bin Laden. So many of us have so much what of we need that we’re driving our friends and family crazy trying to guess what we might want.

As a result, in desperation, we give bad neckties, odd-colored sweaters or sample packs of sausage.

Most of today’s gift cards are “store value cards,” and have all but replaced traditional paper gift certificates. If you plan on getting a gift card, advises the National Retail Federation, here are some important things to keep in mind:

* Not all gift cards are the same. Check around and read the fine print, because retailers and banks have different policies.

* Some gift cards can end up depreciating if not used in a certain period of time because of inactivity fees.

* Some gift cards can’t be used after a certain period, typically 12 months.

* Some retailers are able to reissue a lost gift card, but it’s important to have the original purchase receipt.

* Check carefully about other service fees and expiration dates, which are more common with mall-issued and bank-issued gift cards than retailer-issued cards.

It’s important to heed this last piece of advice, according to a report in the December issue of Consumer Reports Money Adviser. The report cites a study by the Montgomery County Consumer Affairs Office in Maryland, which found many bank gift card issuers levy fees ranging from $3.95 to $11.95 just to purchase the card.

Gift cards issued by banks generally offer terms and conditions less favorable to consumers, the study found.

While gift card expiration dates are becoming rarer, inactivity or “dormancy” fees – usually $2 a month if a card has not been used for 18 months – have become common, according to the report. All the bank-issued gift cards had expiration dates and monthly maintenance fees.

Out of the 30 retail cards studied, the 18 ranked highest were: Best Buy, Borders Books, Circuit City, Costco, Gap, Hecht’s (May Department Stores), Home Depot, J.C. Penney, Lowe’s, Nordstrom’s, Old Navy, Pet Smart, Sam’s Club, Sears, Sports Authority, Starbucks, Target and Wal-Mart.

For more about which gift cards are worth your money, go to www.montgomerycountymd.gov/consumer. The data compiled in this report also appears in Consumer Reports’ Money Adviser newsletter and on the publication’s Web site, www.consumerreports.org (click on the Holiday Giving Guide link).

If you receive a gift card, try to use it right away. About 4 percent of people keep their gift card without using it for more than one year, according to Stored Value Systems.

If you discover an old gift certificate or gift card, don’t assume you can’t use it. Recently, I found a $25 gift certificate from J.C. Penney given to me in 1995. I called Penney’s customer service toll-free number and was told that I could still use the certificate.

I wasn’t always a fan of gift cards or certificates because I thought they weren’t creative. But I’m a convert now. If you shop for the right card, it could be a welcome gift that won’t have to be returned or re-gifted.

Washington Post Writers Group