Gift Cards Might Be Convenient, But They Aren’t Always Cheap

With the dawning of the gift card age, gift givers thought we had finally moved past the days of fruitcakes and ugly sweaters. Because you can't go wrong with plastic, right?

Maybe you can. It turns out that much of our good intentions are still going unused. But instead of going in the trash or to the thrift store, our gifts are going to making businesses richer. Retailers call it breakage, the portion of gift cards and certificates that never get spent. And breakage is no chump change. Most retailers like to keep it on the hush-hush, but here's an idea of how much we're "donating" to stores each season. Home Depot made $37 million off gift cards last year, while Best Buy brought in $38 million, according to the NY Times.

For shoppers on an already tight budget, it's an insult.

New credit card laws could help by limiting the damage stores can do. For example, stores won't be able to charge fees if a card isn't used within a year or allow funds to expire before five years.

But those rules only apply if the gift recipient eventually spends her card. But what if it gets lost, as many do each year? What if it gets forgotten? What if the store goes the route of Circuit City, Mervyn's or Linens N' Things and goes out of business? (I've actually received gift cards from all of these now-defunct stores at one point in the past.) Rather than bringing joy to friends and family, we're putting our already stretched dollars into the hands of big business.

It's both good and bad news. Bad, because some of our money is going to waste. Good, because it's a reminder that it's the thought, not the monetary value or convenience, of the gift that counts.

If you can afford it, why not just give cash? There's no way the recipient is going to let that languish in his wallet. Not sure cash is appropriate? Then how about a gift that everybody needs, like food (excluding fruitcakes) or a gas or grocery card? A nicely-framed photo of you and your pal is an inexpensive way for her to decorate her home and commemorate your friendship. Or, instead of a gift card to her favorite restaurant, why not treat her to dinner?

A gift doesn't have to be expensive or convenient or generic to be memorable. Now, if you can barely afford a simple gift, or if you don't even have time to come up with a non-monetary way to spread holiday cheer, it sounds like too little money and too much debt has taken its toll. In that case, maybe it's time you focused on your own needs this season. For many consumers, bankruptcy has the ability to give the ultimate gift - financial freedom. Find out for free if bankruptcy could make the holidays and beyond permanently jollier when you try a complimentary personal debt analysis with an Atlanta bankruptcy attorney. It's the gift that really will keep on giving.

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