Cashing in: Gift cards useful provided you use them

Karen Caffarini

Chances are you’ll find a gift card in your stocking this year; nearly $25 billion was spent on them during the 2008 holiday season, according to a survey conducted for the National Retail Federation.

They’re a great gift alternative provided you follow these tips.

Read the fine print

Look for expiration dates, replacement policies, fees and similar restrictions. Some cards lose value if they aren’t used within a certain period of time, and some charge a fee if they’re lost.

Keep a copy of the gift card along with the receipt, Consumer Reports recommends on its Web site. If you don’t know the card’s terms and conditions, the original purchase receipt or the card’s ID number, ask for them from the person who gave you the card, adds the Federal Trade Commission.

“Know what you’re up against,” advises Cheryl Reed, communications manager for Angie’s List, “or the gift card may not end up being the gift it was intended to be.”

Spend it

“The gift card won’t grow in value. When you get it, the best thing to do is spend it,” Reed says.

If you use the card in a timely manner, you won’t have to worry about it getting lost or stolen, losing value, or becoming worthless if the store goes out of business, according to Consumer Reports.

Your best bet is to spend it within the first month, consumer advocates say. Unused gift cards are big business for retailers: According to Consumer Reports, in 2007, retailers American Eagle and Abercrombie and Fitch booked a combined total of $13 million.

Combine it with sales and/or coupons

Many retailers hold special sales after the holidays as a way to entice consumers to redeem their cards. The National Retail Federation notes that store shelves are stocked with new items in January, so shoppers have a good selection to choose from.

Taking advantage of sales -- and any coupons stores offer to lure people in during the normally dry shopping days in January -- will boost your buying power.

Treat it as cash

To keep from losing the card, treat it as you would cash, Reed says. Place it in your wallet or anywhere else you routinely put your cash as soon as you get the card. Keep it in sight so you remember it’s there.

If the card is lost or stolen, report it to the issuer. Like with lost cash, you may not get any money back, but some issuers will replace the card with a fee, according to the FTC.

Seek out competitors

Even if you buy a gift card from a seemingly rock-solid retailer, it’s possible for the store to go out of business – especially if the card recipient procrastinates.

According to Consumer Reports, some retailers will honor gift cards from competitors. Or seek out a third-party issuer such as a gift-card Web site, supermarket or financial institution that offers cards as part of their rewards programs.

One example: American Express and Discover honored Sharper Image gift cards when the store went out of business.