Yes, we know you want a gift card for Christmas. At least, the National Retail Federation says you do. The go-to present for distant uncles everywhere is the most requested holiday gift item eight years running, according to research from the industry group.
Americans will buy about $124 billion worth of gift cards in 2014, according to research firm CEB. (That's a 5 percent growth over last year, though the rate of growth seems to be slowing.) The NRF says $31 billion of that will be spent during the holiday season. Adults 65 and older will spend the most on gift cards: $204, according to the NRF. Thanks, Grandma!
And why not? Certainly they are more useful for student-loan-burdened, wage-slaving young folks than, say, drugstore perfume. And tighter regulations have made gift cards a smarter consumer choice than in years past-less than 1 percent of gift card value will go unused this year, the CEB research states.
But there still are pitfalls. Here's how to responsibly buy and use those gift cards.
FOR SPENDERS
Register the card if you can
Not many places offer registration options, according to CEB senior research director Brian Riley, and when they do, it's to try and earn your loyalty.
"They hope to get you to buy more on top of it," he said. "The industry has not really embraced the registration."
Registering your card can protect your card balance if you lose it or it gets stolen. Riley said Starbucks and Crate & Barrel are two retailers that offer card registration.
Spend quickly
Do I really have to tell you to spend free money? In case you need persuading, remember: A lot can go wrong if you don't get cracking.
"Really the most important takeaway for consumers is to keep in mind that these were never designed to be savings products," Riley said. "Don't try to accumulate these."
For one thing, you could lose your card or it could be stolen. Unlike credit cards, there probably isn't a mechanism to recover the loss.
"If you lose a $50 card, it's like losing a $50 bill," Riley said.
Or-you never know-the retailer could go out of business. It happened to Sharper Image retail stores and Linens N Things; if you procrastinated on spending gift cards at those places, your cards were useless.
FOR BUYERS
Check for deals
Some places will offer you free stuff if you purchase enough gift cards. Outback Steakhouse, for example, will give you a $20 bonus card for buying $100 worth of gift cards.
There's a trade-off between flexibility and price
General-use prepaid gift cards, such as those from Visa or Mastercard, can be used just about anywhere-but you'll have to pay an extra fee on top of the value of the card. For example, a $200 Visa gift card will cost you $206.88 at walmart.com. A card for a specific retailer generally won't pull that little trick, but it can only be used at that retailer. Your kid sister probably can't spend that Chipotle card you got her at Victoria's Secret. (Maybe that's for the best?)
Just give cash
Aren't gift cards just the veneer we put on to make us feel less gross about giving cash? If you're going to give money, you might as well just, you know, give money. The recipient is going to know exactly what you spent anyway.