WHY ARE GIFT CARDS SO HARD TO USE?

Gift cards as an industry has gone from relative obscurity before about 2001 to a $90 billiion a year business in 2009. Why do retailers and card issuers love them so much? Gift cards make them a lot of money.

Retailers love their own branded gift cards (closed-loop gift cards) because (a) they boost sales as people give gift cards (b) people spend more than the gift card face value when they use them, (b) they keep people coming back, and (c) because people lose them, forget about them, and just forget to use them.

The issuers of the Visa, Mastercard, American Express, and Discover gift cards (open-loop gift cards) love them because (a) they charge you $$$ up front before even you use them, (b) they make money when you use them, (c) if you don't use them promptly they start charging you fees, and (d) because people lose them, forget about them, forget to use them, or have great difficulty using them.

A lot of the value of gift cards goes unused each year; 10% of gift card face value never gets used. That means in 2008, $9 billion was left sitting on the table by the people that bought or received the gift cards.

This wasn't a mistake. Many gift cards are designed to be difficult to use.

WHAT CAN YOU DO ABOUT IT

We set up this site to help educate people about their gift card options. If you have a gift card that you can't or won't use, there are many RESOURCES for selling, trading, or cashing in your gift card that are available now.

Did your gift card stop working prematurely? Do you have a dispute with the issuer if the gift card. There are many LEGAL options and organizations that can help.

Eventually, we hope to create a large database on specific information on gift card VENDORS so you can educate yourself before you buy, or know how to deal with a specific vendor if you have problems.

THE LATEST NEWS

If you are curious about what is happening news-wise in the gift card world, our NEWS/BLOG page has the latest gift card information hand-picked from various news feeds as well as the results of some of our own research and pursuites into gift cards.

(New) We've recently updated to WordPress for our blog; you can now search our blog posts and subscribe using RSS.

TIPS

Whenever you use an open-loop gift card (Visa, American Express, Mastercard, or Discover) for an online purchase, ALWAYS be very careful to enter the expiration date and CVV correctly. In many cases, if you accidentally put in the wrong information, it can put a hold on your funds for the amount you are trying to spend. Some card-issuing banks will keep that hold on for an unreasonable amount of time, all the way up to 30 days.

This happens because often times the merchants card-processing network will return a with a successful transaction even though the information is incorrect. They basically leave it up to the vendor to decide whether or not they want to accept the transaction given that either the CVV or expiration date is incorrect. If the vendor cancels the transaction because of this (which most SHOULD do) your funds will be held for some amount of time.

Check your state gift card laws here or here.