Before You Buy a Gift Card, Read This
5 ways to make sure a well-meaning gesture doesn't become a worthless one
A gift card can be the perfect present for the niece you haven't seen in years or the person in your life who's impossible to buy for. The problem is, gift cards are such a popular holiday convenience that scammers have taken a liking to them, devising multiple ways to hack cards and shop until there’s a zero balance. In addition, some gift cards expire, which means the recipient could forget to use it and then find herself out of luck — or the store could go out of business before the dollars are spent.
Give gift cards with confidence by following these five safety tips from Payments Journal, an online source of information on banking, and www.tripwire.com, an award-winning blog on information security from a software company in Portland, Oregon.
Buy new, not used. There are plenty of places to re-sell gift cards for less than face value in exchange for cash. A $50 gift card might be worth $30 in cash (the cash value is typically about 60 to 85 percent of the face value). The buyer then sells the gift card for, say, $40, and pockets the difference. Problems arise if you buy one of these and an unscrupulous former owner hangs on to the PIN and card number, meaning he can use up the card online after you’ve bought it.
Another drawback of buying used gift cards: They can be cancelled by the retailer if the card was purchased with a stolen credit card. As a third-party buyer, you would then be holding a worthless card. To be safe, buy gift cards directly from the retailer that issues them.
Watch out for tampering. Crooks have been known to write down the numbers of gift cards in a store and then check the merchant's site online to see when the card is activated, so that they can spend down the balance. Newer cards often have the additional protection of PIN numbers, but some daring thieves scratch off the coating (similar to that on a lottery ticket) so they have the PIN number as well. Most gift cards are now sold in a plastic case to prevent potential thieves from getting either number. Still, if you buy a gift card that's not in a plastic, make sure no has scratched off the coating of the PIN number.
Keep your receipt. If you or the person you give a gift card to discovers someone else has managed to drain it dry, you may be able to get your money back by going to the retailer and presenting the receipt.
Buy a card that doesn't expire. Some states prohibit expiration dates on gift cards, but not all do. Regardless of whether it has an expiration date, it’s best to use a gift card as soon as practical, since they’re easily lost, stolen or forgotten. (More than $44 billion in unredeemed gift cards went to waste in the United States between 2008 and 2014, according to CardHub.) There’s also the risk the retailer will go out of business before a gift card is used. If you give a gift card to a friend or relative, consider inviting him or her to go shopping with you after the holidays.
Read the fine print. Gift cards that do not have expiration dates may charge fees after a period of inactivity. This means the card’s value could evaporate from monthly service fees alone if it's not used promptly. Look for a card that doesn’t charge fees.
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