Buyers' guide to gift cards: 5 questions to ask before buying

Doing homework on your gift card purchase will decrease hassle, cut cost


Want to save money on gift card buying? Ask yourself some key questions, do a bit of homework and your extra effort can mean extra cash in your pocket. Gift cards: Key questions

Americans will load about $124 billion on gift cards in 2014, according to the advisory company CEB, but too often, they don't put much thought into buying them. They'll snag a half-dozen cards at the gift card mall in their local grocery store without thinking about whether they might be able to get it cheaper somewhere else. That's a mistake.

If you treat buying a gift card the same way you treat buying an HD television or a refrigerator -- carefully considering which one best fits your needs and then shopping around diligently for the best deal -- you can steer clear of unnecessary fees and other costs and get the biggest bang for your gift card buck.

To get started, ask yourself the following questions:

1. Should I buy a gift card that can be used anywhere?
Many people love general-purpose (or open-loop) gift cards. These cards that bear the logo of Visa or another credit card payment network, are as good as cash because you're not limited to a single retailer or store as you are with retailer-specific gift cards. You can use them anywhere you can use that network's credit card.

Problem is, they're also more costly. Purchase fees for Visa, MasterCard and American Express gift cards can add an extra $3 to $7 to your cost.

Solution: If you know your friend or relative loves Target, for example, consider a Target gift card. If they just bought an iPad, get an gift card for the iTunes store. It'll limit their choices, but you can save yourself money while still being confident that the recipient will enjoy the gift.

2. Do I have to pay full price for the card?
With a little shopping, you can find some gift cards at a discount. Want a Home Depot card? You can spend about $122 to get a $150 Home Depot gift card from, one of several online discounters.

Solution: Before you buy that card at the grocery store's gift card mall, do a little searching to see if you can find it cheaper online.

3. Can I replace the card if I lose it?
If a card is lost or stolen, it can often be reactivated with the remaining balance if the recipient can show proof of purchase. If you don't have proof, you're probably out of luck. Fees for reactivation vary. Some retailers offer it free, but it can cost $15 to replace a lost Wells Fargo Visa gift card.

Solution: Keep those receipts! Stash all of your gift card receipts in one drawer or envelope so you'll know where they are, and then don't throw them out until well after the holidays.

4. Do I have to have the actual plastic card?
Sending a gift card via email saves shipping fees and -- last-minute shoppers note -- saves time. It also provides an electronic copy in case a card is lost or stolen. Virtual gift cards (or "e-cards") have gone from novelty just a few years ago to standard operating procedure for most large retailers.

A major benefit of virtual cards is immediacy. Last-minute shoppers are no longer obligated to wait for a gift card to arrive in the mail or pay for expedited shipping. They can purchase and email their gift within 24 hours -- or print it out and slip it into a greeting card.

Solution: Check out retailers' websites to see if they offer virtual gift cards, but be sure to read their rules as well.

5. Can I save the recipient some money, too?

The Credit CARD Act of 2009 took much of the sting out of gift card fees by setting limitations on gift card dormancy fees, expiration dates and other terms. Dormancy fees can't be imposed unless the card has been inactive for at least 12 months. After that, only one such fee could be charged each month, and the issuer's policy on dormancy fees must be clearly disclosed. Gift cards can't expire for at least five years after they were last loaded with money.

There remain significant differences, though, in how much they charge for shipping, and in their denominations.

Solution: Scour the fine print. The recipient of your gift card will thank you.

See related: How to replace a lost or stolen gift card 13 ways to get gift cards for less

Updated: December 22, 2014

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Updated: 11-24-2015

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