The risks of gift cards

The risks of gift cards

Kansas City Star: Gift cards can be useful for holiday shoppers, especially when it comes to that distant cousin nobody knows very well. But the cards carry some risks, and consumers should take the time to consider them.

With the economy in a tailspin, the financial status of a company becomes important because of the limited protection given to holders of their gift cards.

A card purchased from a company that files for bankruptcy may lose some or all its value.

In addition, it may be difficult to redeem a card if a retail chain closes down some of its locations, although the advent of Internet shopping has surely alleviated this somewhat.

Opting for gift cards that can be used in a wide variety of locations, such as those issued by shopping malls or major credit card companies, helps avoid the possibility of a card losing its value if a particular retailer disappears.

Potential fees

But though these gift cards offer more protection for consumers, they often come with potential fees.

If a card isn’t completely used after a year, for example, it may have a certain amount subtracted from it, with more fees exacted in succeeding years. Be sure to tell card recipients about any restrictions.

It is frustrating to find an old gift card only to discover it has lost all of its value.