Gift Card Dangers

http://flic.kr/p/5ZAspC

Gift cards are an easy gift, which makes them extremely popular, especially at the last minute. But gift cards frequently go unused, and may come with hefty penalties. Before you give a gift card, consider the risks.

For starters, $8.2 billion in gift cards go unredeemed every year. They expire, get lost, or just never get used, for one reason or another. New rules mean that cards may not expire for at least five years, but they can still be lost or forgotten.

Watch out for inactivity fees on some cards. Under federal rules, inactivity fees may not be charged for a year, but they can be charged monthly after that. In other words, the gift card may end up worth less—or worthless—the longer it goes unused.

Stores going out of business can also be a problem, because gift card holders become unsecured—i.e., SOL—creditors.

If, with all that in mind, you still want to buy a gift card, check out the Federal Trade Commissions guide to buying, giving, and using gift cards.