With Christmas on the horizon, shopping for last minute presents – especially for those you may not know so well – can mean turning to the convenience of gift cards.
Despite Australians spending $2.5 billion each year on gift cards for family and friends, there are times when restrictive conditions can mean they remain unused.
Speaking to FEMAIL, Australian financial advisor Helen Baker highlighted some of the problems that come with buying gift cards as presents. She has also shared a few top tips for maximising the benefits.
Financial advisor Helen Baker said while gift cards are a convenient gift option, there are some pitfalls to be aware of
WATCH FOR EXPIRY DATES
A law change in NSW in October now means retailers have to ensure gift cards come with a minimum expiry date of three years, but the legislation is yet to be rolled out across Australia and this change isn’t effective until March 31, 2018.
Ms Baker said limited expiry dates are the biggest problem when it comes to using gift cards because not only do shoppers not get what they paid for but the unused funds go directly to the retailer.
This figure is close $60 million a year in New South Wales alone, reports Business Insider.
‘It works in the retailers’ favour because there’s money trapped with them, and unless you spend it, it’s lost.’
Though gift cards make an easy and convenient gift, they can be fraught with problems shoppers aren’t often aware of
The money expert said another problem with gift cards is that it can be difficult to track balances, especially if you’re making smaller purchases over time.
Gift cards which offer the best value:
Unlimited expiry dates:
The Good Guys
36-month expiry date:
H & M
‘If you’ve spent a bit here and a bit there, you’ll probably won’t remember how much you have left, which means it’s likely you’re leaving unused funds on your card.
‘A David Jones’ gift card is good, she said. ‘They will print the balance on the bottom of your receipt.’
Stefanie Menezes, spokesperson for consumer advocacy group CHOICE also urged shoppers to take note of gift card expiry dates and other conditions.
‘It’s worth remembering cards with time restrictions are a gift horse for retailers who can take advantage of inflation, changes in value and low redemption rates.’
TRICKY TERMS AND CONDITIONS
While gift cards are convenient and can be ideal for last minute presents, hidden terms and conditions can mean extra costs, or worse an un-redeemed card.
‘Selecting the wrong one can see your loved one wrapped in tricky terms and conditions and stuck with nothing more than a piece of plastic by next Christmas, said Ms Menezes.
Ms Baker also outlined that cards that can be pre-loaded with a set amount of cash, such as Visa Gift Cards available through Australia Post, also come with extra fees.
Always check the conditions of gift cards before you buy otherwise your loved ones may end up with a useless piece of plastic
‘I might be spending $100 on a gift card for somebody, but they will charge $5.95 for the actual card,’ she said.
‘You could just gift somebody $100 cash and wrap it up in a little box and it would be cheaper than buying a card where you are paying extra on top.’
‘It’s better to get a card that can be used by multiple retailers, especially one that allows you to buy groceries,’ Ms Baker advised.
Though not quite as impressive as a gift card, giving cash ensures there are no tricky terms to deal with
‘Take the cash you would have spent and put that towards a gift you would like to buy for yourself,’ she continued.
Other fees that can catch shoppers out include postage, activation fees and conditions on where and how the money is spent.
Some cards that come with extra costs include Myer which incurs a delivery charge ranging from $5.95 to $14.95, and some shopping centre cards which may not be accepted by all stores in the centre.
TREAT YOUR GIFT CARD LIKE CASH
If you do receive a gift card, it’s worth bearing in mind that unless you go online and protect it with a pin number, if it is lost, there’s no recourse.
‘If you lose a gift card, there’s no cash refund,’ said Ms Baker.
Though retailers aren’t under any obligation to honour a lost or stolen card, keeping records such as proof of purchase or noting a serial number is advised.
If your card comes with other detail like a serial number, make every effort to note this, or register your card online
Another issue shoppers need to be aware of is that if a retailer declares bankruptcy, gift cards may become worthless.
Ms Baker advises shoppers to really think about those who they are buying for, and to choose a gift card that is suitable and more importantly has some flexibility.
‘To avoid the gift card Scrooges this year look for a card without the expiry date or just give cash,’ Ms Menezes said.
‘Retailers such as Bunnings, JB HiFi and The Good Guys offer unlimited expiry with their gift cards,’ she concluded.