Learn first, Buy second: Gift Cards for the Holidays

Like many people, I love shopping for the holidays. However, as the family grows I simply don’t have the time and even worse, I cannot keep up with everyone’s “want” list. So, we occasionally have to cut corners and go the route of the gift card.

In the beginning gift cards were convenient and user-friendly. Then demand for these cards skyrocketed resulting in greedy card issuers creating asinine fees and penalties for things as simple as not using the gift card quickly enough.

Bankrate lists some points to consider before buying a gift card and at the end of this list, I’ll post a link to their evaluation of dozens of cards.

Bankrate surveyed the top 25 retailers, as identified by the National Retailer Federation, about the costs, terms and conditions of the gift cards they offer, both plastic and electronic. We also surveyed the four largest credit card companies: American Express, Discover Card, MasterCard and Visa.

• The maximum amount allowed on cards has increased in a number of cases, with Best Buy topping the list: Gift cards purchased in stores have a limit of $9,999. J.C. Penney has raised its maximum to $500 from $250.

• State laws prohibiting expiration dates have had some effect. Thirteen states have banned them, and although the laws apply only to local retailers, not national ones, some national issuers have voluntarily done away or loosened their card expiration policies.

• More retailers are allowing gift cards to be used online. Both Lowe’s and Sears allow all gift cards to purchase merchandise online.

• A number of retailers, such as Food Lion, Hannaford and Kash n’ Karry, now offer reloadable gift cards.

• Personalized cards are a new trend. Wal-Mart allows customers to upload photographs to create their own cards, and American Express offers personalized gift cards on which the recipient’s name can be embossed.

• AmEx gift cards can also be purchased in stores this year, whereas last year they were available only online. Target and Bloomingdale’s have added e-cards, which can be used online but not in stores.

• Some merchants have done away with some fees while others have introduced them. American Express has eliminated its $3.95 fee to purchase a card; now they charge only a delivery fee. Discover Card and Safeway used to offer free shipping; now Discover charges $3.95 to $6.95, depending on packaging, and Safeway charges $2.50 for delivery.

• Of the electronic cards surveyed, only J.C. Penney allows the cards to be used to purchase merchandise in stores. The others — Wal-Mart, Costco, Target, Macy’s, Bloomingdale’s and Kohl’s — allow electronic gift cards to be used only online or for catalog purchases.

Visit BankRate to read the individual card analysis or to read this entire story.