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Gift cards can make the ultimate digital holiday present.
Also known as mobile, electronic or e-gift cards, the virtual incarnation of these popular presents can now be sent via text and used instantly. You also can store them in a digital wallet, personalize them to make one-of-a-kind gifts, and even buy them at a discount or using rewards points.
Just as with traditional gift cards, consumers can find e-gift cards for purchases at specific retailers and restaurants or general-use cards bearing traditional card-network brands, such as Visa and Mastercard.
The popularity of digital gift cards is on the rise. The number of e-gift cards purchased annually per consumer surged to an average of 6.1 this year, after remaining at approximately 4 in the last three years, according to a 2017 First Data study.
The same study also found that, among all consumers who were aware of mobile gift cards, 52 percent had used one, and that 65 percent of all millennials have used a mobile app to purchase a gift card.
And there are plenty of choices. In 2016, 72 percent of the 200 largest merchants offered e-gift cards, according to a survey by Shelley Hunter, Gift Card Girlfriend blogger and spokeswoman for the Blackhawk Network.
Considering e-gift cards this holiday season? Here’s what you need to keep in mind:
Seven things to keep in mind about e-gift cards
- You can send them by email or via text. They offer you a different way to connect.
- Some face restrictions. Some can only be used online, or can’t be returned. Check before you buy.
- You can buy them at third-party sites at a discount. Just make sure the site where you shop offers consumer protection.
- You can use rewards points to buy them and stack savings.
- When combined with e-rebatesand some loyalty apps, you can save even more.
- You can personalize them. Some retailers let you add a photo or a specific design.
- They are mobile-friendly. You can add them to your digital wallet, like Android Pay or Apple Pay.
E-gift cards offer something that traditional gift cards don’t: immediacy.
Your college student aces a big test. You want to reward her with movie tickets or a trip to Starbucks on the spot. Enter the e-gift card. You can send it wherever you are, and she can receive it in the moment.
2.Some might face restrictions.
While it’s rare, some online stores won’t accept digital gift cards (or traditional gift cards), or they may place restrictions on their use, says Joe Ridout, consumer services manager for Consumer Action.
Some merchants block e-gift cards (and gift cards) for recurring charges because cards likely will run out after a few payments, says Hunter. And issuers of network-branded cards often block their use at online merchants where consumers could convert the gift into cash – like PayPal.
Additionally, some digital cards can’t be used in brick-and-mortar stores. For instance, Visa e-gift cards can be used only online or via phone. Likewise, digital gift cards from Dick’s Sporting Goods are for online shopping only.
So, it’s smart to check exactly where and how the card can be used – and if it can be returned – before you click “buy.”
Pro tip: Many restaurants and retailers offer digital gift cards, along with rewards and freebies, through their apps. (Two examples: Steak \u2018n Shake and Pinkberry.)
With places you frequent, “I recommend checking to see if there’s a branded app” that offers e-gift cards, says Lindsay Sakraida, director of content marketing for DealNews.
3. You can buy them at third-party marketplaces.
Sites that deal in traditional gift cards sell digital gift cards, too. Think of them as gift-card malls: You’ll have options from a lot of different retailers, not just one. A few sites experts use to buy discounted cards include Raise, GiftCardGranny, CardPool and GiftCards.com.
“I’m finding more deals are available at third-party [sites],” says Hunter. “They’re more often going to offer you a discount.”
At the same time, marketplaces where individuals come together to buy and sell digital and traditional gift cards are not immune to criminals. And some of the sites “have proven very susceptible both to hacking and to fraud,” says Ridout.
His advice: If you’re dealing directly with individuals (instead of trusted companies), “go there to sell, not to buy.”
Sakraida’s take is a little more liberal: She looks for sites that offer easily accessible customer service and a money-back guarantee for sales brokered through the site. Raise, GiftCardGranny and CardPool all offer consumer protection.
4. You may buy them at a discount using rewards points.
Stephanie Nelson, author of “Greatest Secrets of the Coupon Mom,” uses rewards points from her Discover it cash back card – which sells retailer e-gift cards to cardholders at a 20 percent discount on its website.
One reason Nelson likes it: “There’s no administration fee and no expiration” for the cards, she says.
Available for stores, restaurants and drugstores, Nelson uses digital gift cards for gifts – and to get an automatic discount on her own shopping.
Her favorite cost-slashing buy: a Land’s End Black Friday sale in which her favorite towels were 50 percent off and she paid for them with e-gift cards that she purchased for 20 percent off.
5.E-gift cards + e-rebates = even more savings.
You also can use rebate sites and apps, such as Ebates and Ibotta, to get additional cash back on what you spend. And with Ibotta, you can elect to receive your savings in digital gift cards.
One frequent-flyer app, United Airline’s MileagePlus X, eliminates the steps in the middle – and you can earn United miles on every purchase. When you use it to buy something in-store, before checking out you use the app to purchase digital gift cards for the amount you’re spending. Then, when you check out, you pay with those e-gift cards.
You have to, however, be a member of United’s MileagePlus program. And if you also use a Chase United MileagePlus Explorer card with the app, you’ll earn an extra 25 percent miles bonus on every purchase.
The tradeoff for buying with gift cards: When you pay with a gift card instead of a credit card, you often forfeit the protections that your credit card confers – things like chargeback protection, warranties or extended warranties, and price matching, says Ridout. “That’s a very big deal if you’re buying an expensive item.”
Pro tip: “I always take a [screen shot] of every [e-]gift card,” says Hunter. Not only does it allow you to find it faster at the register – but you won’t be dependent on working Wi-Fi or digital service.
Video: Tips for using mobile gift cards
6. You can personalize them.
With e-gift cards, “there’s lots of personalization,” Hunter says.
If your goal is to truly personalize the card itself, you probably want to buy directly from the retailer, she says. Often, those are the venues that will allow the most personalization.
Retailer sites are also more likely to offer buy-one-get-one deals on e-gift cards, says Hunter.
7. You can carry them on your phone.
Looking for an easy, free way to keep e-gift cards front and center in your wallet? Try a digital wallet, such as Android Pay, Apple Pay or Samsung Pay.
“I’ve used a number of apps,” says Hunter. But, these days, she adds, “I suggest everyone put every gift card into a mobile wallet.”