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Gift cards have long been a saviour for the holiday procrastinators and last-minute shoppers, but while gift cards make a lot of money for businesses, you may be losing out on yours as a result.
Whether as a buyer or recipient of a gift card, you could be opening yourself up to some financial losses. With some vigilance and know-how, you can avoid the gift card money traps.
A story came out recently in CBC, regarding buyers losing money on gift cards for companies that went out of business. As the story explains, if you purchase a gift card for a company that goes out of business, you are out of luck.
As customers of Spareparts found out last week, gift cards are unusable when a store goes out of business. When the Saskatoon-based sunglasses and accessory chain went into receivership on Tuesday, people who had purchased prepaid cards in advance of the holidays were out of luck. [CBC]
Unfortunately, to avoid this you have to be a bit of a vigilant consumer. Meaning, research companies before buy gift cards for them to see if they will be successful in five years. Kind of hard to do, but without forgoing the purchase completely, this is how you can avoid issues.
Another tip, is to actually avoid buying gift cards altogether. The vast majority of recipients don’t use the full balance on their cards, and Consumer Reports claims that one-third of consumers don’t use their gift cards at all. That is money down the drain.
Think of your gift card as cash, this will help you change your spending habits and take the value of the gift card seriously. When we are spending cash, we think about the price of things, and will look for savings. Oftentimes, we think of gift cards as “not our money”, so we are quick to be frivolous with our spending of it.
Also, remember that those last few dollars left on the gift card can really add up. Make note of exactly what your balance is (if you don’t use it all in one purchase), so you can use the exact amount remaining at some point.