Gift Cards and Credit

Posted On: 2005-12-06Length:

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Welcome to our Debt Podcast for Tuesday, December 6, 2005. I'm Jay Fleischman and thanks for staying subscribed. As always, send questions or comments to the Debt Podcast at debtpodcast@gmail.com. You can also check out the show notes at debtpodcast.blogspot.com. On today's show, a look at gift cards and what you need to know about buying them this holiday season. Also some podsafe music, and today's daily tantrum.

First, our main topic of the day is the gift card. Those are the credit-card like plastic cards that you find so often next to the cash register of many retailers. They come in pre-packaged amounts of $25, $50, $100 or more, and they'll allow the recipient to use it just like cash to make a purchase in the store. In other words, they're gift certificates that don't crumple over time. Or do they? Gift card are handy, yes, but you the buyer need to understand that you're giving a gift with a ticking clock in it. Many gift cards can be used only for a specific period of time, after which they become to lose value. If a gift card goes unused for a certain amount of time, it may begin to accrue charges for dormancy, typically on a monthly basis. Sometimes that charge is modest, a dollar or two. Other times it can be $5, or even $10 a month. And on a $50 card, $10 a month will eat up the full value pretty quickly. That's not quite a great gift, is it? And remember, certain gift cards aren't free. American Express, Visa and MasterCard also offer gift cards. They're handy because the recipient doesn't tie down to a certain retailer when making purchases. But these cards cost money, sometimes as much as $10 or more. So instead of giving a $50 gift card, you're spending $60 or more on it. So why not just buy a gift for $60? In fact, why buy a gift card at all? I can understand not knowing what to buy someone for the holidays in case of an employee, or your mail carrier. But friends and family members? For those people, the gift card is the newest version of the picture frame, or scented candle. A gift that shows absolutely no thought. If someone is a friend of family member, and you want to show that you're thinking of them this holiday season, think a few minutes longer before making a purchase. Buy a CD, a video game, a DVD movie, heck, even buy a pair of socks. Anything shows more thought than an empty gift card. And it won't cost you any more than the gift card itself would have, so why not...