Gift Cards Have Become Hugely Popular, but Have Risks

Gift cards are widely popular gifts for the holidays as they give the receiver what he or she wants, a chance to pick out his or her very own gift.

The popularity of the gift card is undisputable. That segment saw over $31.75 billion spent on purchasing gift cards, said the National Retail Federation.

Four out of every five shoppers during the holiday are planning to purchase at least one gift card. The average shopper will spend over $172 for gift cards.

While gift cards certainly have their advantages, which card you purchase and what you end up doing with it will make a big difference, said experts.

Cards need to be verified. The PIN on the back should not be scratched off. If the card is not prepaid, make sure the sales clerk runs it through to ensure the dollar amount has been loaded properly on the card.

Once the gift card is purchased, it is not safe. The balance needs to be monitored because there are thieves that scan card numbers off the card’s back and then check with the business to find out when it was activated and then use that card to purchase items.

One way to stop that from happening is purchasing gift cards that are not on a display rack, but behind the counter.

At times, retailers sell preloaded cards of their own for less than their face value, a nice savings during the holiday season.

If a restaurant, venue or store were to go out of business all value is lost on the gift card.

When purchasing a gift card that is not straight from a particular retailer, but generic ones that can be used nearly anywhere, remember that credit card agencies or banks charge a loading fee of between $3 and $4.

Some cards are not actually gift cards, but credit cards that are prepaid and they often times have user fees that the giftee will likely not appreciate.

Credit Cards that are prepaid are an industry that is over $100 billion big. The Consumer Financial Protection Bureau proposed more user protections for the prepaid cards.