Your feet are sore and your bags feel weighed down with bricks, but you can't go home because you've only ticked off half the Christmas shopping list. Suddenly, the gift card section morphs from a "no go zone" to a "one size fits all" solution.
It appears there's no stopping the booming popularity of gift cards. They're convenient, there's a huge range of brands (Netflix, Bonds and Domino's Pizza, to name a few), and you can even personalise them.
More BusinessDay Videos
Putting a price on Christmas
Australians will spend billions this Christmas, with the largest percentage spent on food.
But you have to be careful, because you may ultimately be throwing free money at the retailer. A new survey exclusively shared with us by NSW Fair Trading showed 89 per cent of 300 respondents had a problem redeeming a gift card.
The biggest problem they encountered was that the card had expired. Some tried to talk to store staff and managers, others lodged a complaint. Overall, 69 per cent said the retailer still refused to accept the card.
![The popularity of gift cards continues to boom.](/web/20161225131507im_/http://www.brisbanetimes.com.au/content/dam/images/g/l/p/3/j/5/image.related.articleLeadwide.620x349.gtf0ki.png/1482542494801.jpg)
Let's talk about the money. The gift card market is worth up to $2.5 billion each year. Two-thirds of the survey respondents couldn't redeem their cards. Also, a 2014 Choice survey found 35 per cent of respondents had used none of the value of at least one gift card in the previous three years.
The figures are rough, the science isn't perfect, but we can guess a massive amount of money is being wasted each year.
I can count myself lucky. When I was spring cleaning I found a $50 gift card for a book store that expired three years ago. Instead of throwing it in the bin, I had a chat with one of the staff (I avoided mentioning my job) and he kindly let me redeem the full amount. I went home with three new books.
But as the survey indicates, my recent experience appears to be the exception.
![Consumers were upset that gift vouchers for Dick Smith will not be honoured after the retailer collapsed.](/web/20161225131507im_/http://www.brisbanetimes.com.au/content/dam/images/g/l/c/9/s/r/image.related.articleLeadwide.620x349.gtf0ki.png/1482542494801.jpg)
This is not an anti-gift card piece. I want to encourage you to think twice and provide some tips so that your Christmas present will be used and not forgotten. Here are some of the problems:
Shops go bust: As we saw earlier this year Dick Smith collapsed and thousands of gift card holders, including one woman who possessed $3600 worth, were left with virtually nothing. Keep in mind Macquarie has predicted more retail collapses, and cites Fast Future Brands (Valley Girl and TEMT) and Pepkor (Harris Scarfe and Best & Less) as being unprofitable.
![Gift cards for many brands are readily available at places such as supermarkets and the post office.](/web/20161225131507im_/http://www.brisbanetimes.com.au/content/dam/images/g/l/w/8/g/a/image.related.articleLeadwide.620x349.gtf0ki.png/1482542494801.jpg)
Fees: Thankfully the vast majority of gift cards in the Australian market have no fees because they're "closed loop". Though Westfield's gift card requires a $2.95 "service fee". I think the worst deals are the "open loop" Visa and Mastercard-branded gift cards, which can be used wherever they're accepted but come with an array of fees.
Take the Australia Post Visa Prepaid gift card for example. You have to fork out $6 to buy the card, $4 to speak with someone about your balance or transaction history, and $4 to get support over the phone. I should mention you can check your balance via text for 25 cents or online for free.
Expiry dates: Most cards are valid for 12 months or 24 months. Reconsider cards with three or six month expiry, such as the one for Ella Bache beauty salons. Should be noted, some retailers do offer a grace period. Consumer group Choice is calling for the minimum expiry period to be five years.
Cash advance fees: It's possible that if you use your credit card to buy a gift card, it will be treated as a cash advance. So check with your provider. Best to use cash or put it on a debit card instead.
Here are some tips:
- Offer flexibility: Unless you know they'd love a Sportsgirl or Smiggle gift card, it's safer to pick a retailer that offers a wide variety of products. You could also buy a card for a shopping centre or for a group of stores, such as a Coles Group & Myer Gift Card. Mary Steffel, a psychologist at Northeastern University in the US, said the more specific a gift card is, the less likely it is to be redeemed. "If you're not sure what your recipient wants, give them the gift of flexibility," she told the New York Times.
- Subtly ask: Encourage the recipient to use the card sooner, rather than later. Consumer advocate Christopher Zinn suggests asking your loved one a few months down the track about what they ended up buying with the card.
- Keep it visible: Make sure the card is in their wallet. If the issue and expiry dates aren't written on the card, get a permanent marker and write the information directly on it. You may also want to keep your receipts and jot down details such as the card number.
If something goes wrong, lodge a complaint with NSW Fair Trading. Happy shopping.
Esther Han is consumer affairs editor.
67 comments
New User? Sign up