Shopping Online with Gift Cards

There are serious pros and cons to weigh before you start shopping online with gift cards.

Pros: Shopping Online with Gift Cards

The shops and stores love gift cards to pieces because they make money when the card is sold and only about 40% of recipients actually spend them.

Gift-card givers are falling in love with them too. Gift cards are easier to wrap than many odd and practical gifts. Oh the convenience! Here's a site showing a long list of possible brands for shopping online with gift cards.

May people like getting them because they can shop for exactly the item they want. And wait for the sales so the gift will stretch farther. So they don't wait for a gift of a gift card, they buy them for themselves!

The shops and stores love them because their money-making season is not only pre-Christmas but stretches on for a number of months into the new year as people do their shopping online with gift cards at their own convenience. This may be an old STAT, but note this; on March 21, 2006, Statistics Canada reported that gift cards helped propel January 2006 retail sales to a record $31.8 billion - up 1.4 per cent from the normally frantic holiday shopping season in December.

Stores and merchants love the gift cards because people buy more of them, and spend more money because of them, often more than the amount of the gift card. The average gift card is for $50. Somehow people are less fussy about the price if a friend has sprung for the first $50 of the cost.

Consumers and merchants alike appreciate the fact that there are less returns when purchases are made when shopping online with gift cards. That's because you, the recipient, got to choose the gift rather than grandma or auntie who could only guess at your preferences.

Gift Cards are a little harder to counterfeit than gift certificates.

Scambusters.org/giftcard.html has 8 tips for protecting yourself from scammers of gift cards.

Cons: Shopping Online with Gift Cards

The Consumers' Association of Canada warns that too often consumers are just giving money to retailers and getting nothing in return. The association's president, Bruce Cran, estimates about one in every four gift cards goes unredeemed, and "they're a very poor proposition for consumers."

"In the event that you can't give a [standard] gift, give cash. That's what you should do," Cran said, adding there's also the risk of a store going bankrupt before a card is used.

Expiry dates and extra fees are always a hazard with gift cards.

If not that, it has happened that someone starts an email virus warning everyone not to use the gift cards of certain stores, saying they are about to go under. Not only does that distress those who have just bought one, but it upsets the stores - particularly when it is not true!

Four Canadian provinces, Alberta, Saskatchewan, Manitoba, and Ontario, have banned expiry dates, fees for using, and maintenance fees on gift cards, but this does not guarantee that other gift cards will comply with those laws. By now most Canadian retailers have dropped all such fees. Many American States are working on similar legislation regarding gift cards. Hopefully, it will spread until this becomes an industry standard. In the meantime, keep alert.

The gift cards by the credit card companies may charge you currency exchange fees when using your gift card for purchases outside of your country.

It's important to know the remaining balance on your gift card before making a purchase. The sales assistant is often not able to look it up beforehand for you. This can create embarrassing situations.

You must remember to keep the card, even when used up, in case you need to return a purchase. If you throw it away, you may be frustrated later. But this creates more record-keeping work.

If your gift card is lost or stolen, you may find it hard to get replaced. That is possible if you have a receipt for the purchase of the gift card (or can get it from the one who gave you the gift card). Best is to record the card number in a safe place. There are some virtual wallets online that allow you to keep all your info about all your cards there.

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For utmost security some people record the gift card numbers and use them only for shopping online, but then shred the cards so that no one else can get access to them.

Are Gift Certificates Better than Gift Cards?

In one way, yes. With a certificate you can get the remaining cash back when you buy something for less than the certificate amount. With a gift card you are stuck trying to find some smaller items to be able to use up the rest of the gift card. Unless you are able to re-load more money on it. That is not always the case.

In another way, certificates are of paper, therefore easier for the merchant to create and they may offer them in smaller denominations. The plastic gift cards are an expense to the merchant or store, however, they are usually in larger denominations, and if the customer does not use all of the gift card, (the average is $50) they get to keep the rest as pure profit.

Gift cards cannot so easily be counterfeited as gift certificates. But they cost the retailer anywhere from .50 to $3 each gift card, and there are setup costs by another company that can go as high as $50,000!

In both cases, gift cards and gift certificates, if you let them gather dust long enough you may find the business has gone under, and can no longer honour the card or certificate. You miss out on your purchasing power.

Shopping online with gift cards works great - as long as you know the facts and use them to your advantage. Using such knowledge and your good wits is what makes you a Power Shopper!

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