Don't Let Your Gift Card Scam You

Consumer Reports will take a full-page ad in the New York Times tomorrow to warn consumers about the pitfalls of giving and using gift cards. Their telephone survey found 27% of all gift cards go unused, and retailers took in an extra $8 billion because of unused, lost, and expired gift cards. Here’s their tips for making the most of the plastic:

  • Register it Some cards must be registered with the issuer, especially if the card is used for purchases online or by phone.
  • Spend it quickly Use the card as soon as possible, especially if it expires or has a monthly maintenance fee.
  • Spend it to the last penny If the card balance gets so low that there’s nothing to buy, ask a merchant to do a split-tender transaction. That involves using the remaining card balance for part of the transaction and another form of payment for the rest.
  • Hold on to it. Don’t throw out the card when the balance is zero. Some merchants require it for returns.

ConsumerReports.org today also launched a special info hub dedicated to informing and empowering shoppers this holiday season.

RELATED: Unused Gift Cards Aren’t Free Money For Stores

(Photo: her wings)

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  1. CumaeanSibyl says:

    If you have some cards lying around that you really don’t want, there are a bunch of websites that’ll let you sell or exchange them. You usually have to sell at a loss, but it’s possible to exchange for equal value. Either way, it’s better than having chunks taken out for “maintenance fees” and whatnot while you’re not using it, and then never getting any value out of it at all.

  2. ptkdude says:

    This story prompts this thought to come to mind:

    Say I have a gift card, and it is either about to expire or is about to start being charged monthly fees. If I buy something, using the entire balance, then return it, will this result in them reloading the gift card with a “refreshed” date? That is, is this a way to prevent the balance from expiring or being charged monthly fees? What about returning the purchase without a receipt, which usually nets you a refund on a gift card?

  3. woertink says:

    Or perhaps give people money which is accepted at all stores (except Apple).

  4. davebg5 says:

    My biggest beef w/these gift cards? Too often the retailers either don’t know or pretend not to know how to use these cards for a split-tender purchase.

    I can’t tell you how many times I’ve gotten AMEX gift cards that I intended to use to help me purchase an expensive item, only to end up paying for the whole item myself on a credit card and then using the gift card for something like dinner b/c of this.

  5. Mary says:

    If you want to use an Amex gift card for a split tender purchase, on most POS systems you must know the EXACT remaining balance on the card, and charge only that amount.

    If you don’t know the exact amount you can either undercharge and have some odd cents left over, or you can’t use it because it’ll come up rejected.

    It runs through as a credit card transaction, not a gift card. If the card has $3.00 on it, and the price is $3.10, it will be rejected like a credit card that’s at it’s limit. There’s no way around this, they’re not doing it because they’re stupid. I suppose if you’re willing to stand there they can start at the transaction amount and guess lower and lower numbers until one goes through…

    This is only applicable for the credit card company gift cards. Store gift cards are usually so simple to use for a split tender transaction that if somebody doesn’t know how to do it and it’s not their first day, they should be fired. But Visa or Amex gift cards are basically the exact same as a credit card according to the machine, it’s the only way to process it.

    If you know you’re exact balance, it’s fine. They might have some trouble, but split tender transactions should be covered in their training.

  6. SteveBMD says:

    In California, a state law has been in effect for many years that prohibits expiration dates on gift cards (even if one is printed on the card). The only exception is that a $1/month fee can be charged if (a) the card has a balance of $5 or less, (b) the card has been unused for 24 months, and (c) the card is reloadable.

  7. kellyhelene says:

    If I have just a dollar or two left on a gift card after my purchase I’ll usually pass it off to the person in line behind me. Mostly with things like Blockbuster gift cards I get from work (since I only use them to buy used games).

  8. uricmu says:

    Gift cards are to me the silliest invention in America. Why is giving someone cash considered rude (a-la Seinfeld), but forcing him/her to buy at a store he might not frequent or which does not have good pricing considered thoughtful or considerate?

    “Gee, for my nephew I’ll get a toys-r-us card” means “I didn’t want to bother trying to find out what he would want”.

  9. spryte says:

    @uricmu: I think as long as you give someone a gift card to a store you know they shop at frequently, then it’s fine. For me, I’m a book-addict, so a gift card to Border’s or something is fantabulous. I’d rather have that then have someone buy me a book I already own or am not interested in or whatever…

    I’ve never really considered a cash gift rude. I guess the difference between cash and a gift card is at least you went out somewhere and bought the gift card, instead of just pulling a crumpled twenty out of your pocket and stuffing it in a card. But personally, if you wanna give me money, you go right ahead.

  10. Speak of the devil: Just last night I went to Carson Pierie Scott to get a suit altered that my Grandma got me from there a year ago. The alterations cost $20, I had an old merchandise credit ‘gift card’ with a remainder of $9.17 that I wanted to use. Too bad the 70+ year old clerk couldn’t figure out worth a damn how to split the transaction, after 10 minutes of watching him randomly push buttons on the register, I gave up and just paid the full $20. So now I’m still stuck with a $9 card for a store I never ever shop at. Any suggestions?

  11. StevieD says:

    I love Gift Cards. Saves a lot of hassles with unwanted, duplicated and wrong size gifts.

    Personally I save my cards and use them when I am short on cash to complete a purchase that I want to keep off of my regular credit cards, or want to use several cards to make a big(ger) purchase. At the same time, the average Gift Card has a wallet life of 6 months or less.

    Personally I like the prepaid AMEX and VISA cards. They are really good for buying online p_rn.

  12. XTC46 says:

    @uricmu: My parents would give me gift cards when they wanted to force me to spend money on something fun for me, not on bills or something like that.

  13. ekasbury says:

    I always thought one of the biggest catches of the gift card *was* the split transaction. Person 1 buys a giftcard for $25 to give to person 2, who takes it to the store and finds something for $27.99. There’s an extra three dollars more than the store would have gotten if the gift-giver had just walked in there to buy something on a $25 budget.

  14. BigNutty says:

    I live in California so I’m protected a lot better than people with gift cards from other states.

    After a class action settlement with K-Mart over a handicap access issue, I received about $9,000 which included about $2,000 in gift cards. Wasn’t that clever of K-Mart? Do they even have K-Marts in other states?

  15. iamme99 says:

    I wonder if there is a charity you could donate gift cards you didn’t want or with low amounts on them? Seems in the aggregate this could be a decent source of revenue for a non-profit.

  16. Antediluvian says:

    Okay, so setting aside the “credit card branded” gift cards (where you can’t look up the balance at the register), I think the worst possible thing you could do is use the phrase “split-tender transaction.”

    Sure, that might be what you’re doing (I don’t know, this is the first I’ve heard of that term), but what 17 year old cashier at Borders knows that phrase?

    Just say, “use this gift card, and take the rest out of this $20 bill,” or “put the rest on this [credit card].”

    It’s worked this way for years. You can even tell cashiers to “put $40 on [this credit card]” and “the rest on [this other credit card].” This assumes modern registers and a cashier with a pulse who can read the terminal.

    Hell, even the old-fashioned, non-PC-based registers at the local supermarket let you do this: enter the amount of cash, press “cash tendered,” see result: either give change, or ask for more money (could be more cash, could be a check, could be a traveler’s check).

    This “hint” doesn’t seem to warrant mention by anyone, nevermind Consumer Reports. It’s like saying, “use your gift card when you visit the cashier” — Duh.

  17. Antediluvian says:

    @LastVigilante: (how to apply funds tendered)
    See my above post for how it was done in the 1980′s. Today works very similarly at most retail establishments, but some might be trickier than others.

    Think of it this way: how often have you handed a cashier a $20 bill only to have them ring in that you gave them $2.00 because they mis-entered the amount? Same deal. They just have to enter that more money was “tendered.” In theory, your 70+ year old cashier should have entered, “$9.17 gift card tendered” and then “$20 tendered,” yielding “$10.83 change due.”

  18. jeffjohnvol says:

    A company I work with was looking at gift cards. They discovered that escheatment rules apply. Escheatment means that if the $$$ aren’t claimed, they have to be turned over to the state. The same thing happens when a company sends a $500 payroll check that doesn’t get cashed. If its not cashed within 24 months, it goes to the state and the state holds it on the check holder’s behalf. They discovered that the same applies with gift cards.

  19. floydianslip6 says:

    Remember that stuff, we used to use it all the time to buy things… It was made from paper, sometimes if the country needed to buy things and was broke we would just start printing extra. What ever happened to giving that stuff to people, what was it called again?

  20. Mary says:

    @LastVigilante: Call the store and mention that the clerk had trouble with the transaction, ask if you can cash out the gift card.

    They might say no, but it never hurts to ask. I’ve known plenty of managers that would trade it for cash in a similar situation.

  21. Mary says:

    @Antediluvian: I’m with you, I’m confused as to why this is mentioned. Everywhere I’ve worked in the last ten years, you swipe the gift card. The register takes what it can, then it tells you what’s left on the card or what’s left to pay.

    It’s so painfully simple that I would be shocked if somebody at a large chain store didn’t know how to do it. If it’s not their first day, then they’re pretty darn inept.

    What you do with gift cards is always hand those to the clerk FIRST. Take as much as you can off of it, eventually you won’t have enough to cover the whole transaction and then you hand them cash or a credit card. Problem solved.

    The wording is off too, “If the card balance gets so low that there’s nothing to buy,” implies to me that it’s got $1.50 on it and there’s nothing you want to spend it on, and you don’t want to spend $18.50 of your own money.

    If it’s a few dollars, then ask if they can cash it out. Most stores allow for this in special circumstances. If you’re a nice person, and it’s not busy, you just might get your cash.

  22. @Antediluvian: I don’t doubt that it was possible, the clerk just couldn’t figure it out and I wasn’t ready to wait for him. And, as is standard for mall department stores, there wasn’t another clerk in sight that could’ve helped him out.

    @meiran: I’ll have to try that, thanks for the idea. Otherwise I guess I’ll just buy a belt or dress socks to finally rid myself of the store credit.