Store Gift Cards

Gift cards from retailers -- fewest restrictions

There are two basic types of gift cards: store- or retailer-issued cards and network-branded gift cards from the major credit-card issuers (such as Visa, MasterCard, American Express, Discover, etc.). Retailer-issued cards are often called "closed-loop" because they can only be used at the issuer's store and sometimes other stores or websites owned by the same parent company. Bank-issued cards, on the other hand, usually bear the logo of a major credit card and are called "open-loop" because they can be used at any location that accepts that credit card.

Virtually every retailer in America offers gift cards, from gas stations to chain stores and restaurants. Retailer cards, for the most part, have no fees or expiration dates, but they are generally limited to use in the issuing store. If the recipient does not like that retailer or cannot find a suitable gift there, it is likely that the card will not be redeemed. In fact, in a report issued by the New York attorney general, it is estimated that around 10 percent of the total amount of gift card purchases goes unredeemed, a figure that includes fees imposed for inactivity. That translates to billions of dollars lost each year. In 2006, according to ConsumerReports.org, Best Buy alone reported a $43 million dollar gain from gift cards unlikely to ever be used. The Montgomery County (Md.) Office of Consumer Protection explains that in total, "this 'breakage' amount is more than double the $3.5 billion annually estimated to be lost from debit and credit card fraud."

In 2008, a nonprofit membership organization, the Retail Gift Card Association, was formed in order to encourage closed-loop gift card issuing retailers to "promote best practices and standards to help the industry grow and shape in ways that benefit both members and consumers," according to the organization's website. Founding members include Applebee's, Best Buy, Home Depot, Marriott International and Subway. According to a press release issued by the organization, its mission is to "create consumer-centered policies and procedures for members that will let consumers continue to confidently buy and use the cards that have become the #1 gift choice over the last several years." In order to become a member, retailers must abide by a strict set of principles, including agreeing not to charge administrative or dormancy fees and eliminate expiration dates.

Wal-Mart, a current member of the Retail Gift Card Association, offers both traditional and electronic gift cards without expiration dates or fees of any kind. The card, however, can only be used at Wal-Mart stores or Walmart.com; it can also be redeemed at Sam's Club or SamsClub.com if you are a member. The Wal-Mart gift card is sold in any denomination ranging from $10 to $2,500. Cards come in a variety of colors and styles. Walmart.com e-gift cards can be bought in any amount from $10 to $200. If you lose your card, you're out of luck unless you've noted the card number and PIN; in that case, you can still use the number online provided no one else has used your card number.

According to CreditCards.com, Home Depot and Best Buy are some of the biggest retailers of gift cards. Both stores offer a variety of gift card designs, none of which carry fees or expiration dates. Best Buy also offers protection against loss or theft; Home Depot does not. If your Best Buy gift card is lost or stolen, Best Buy will replace it as long as you can provide proof of purchase. Best Buy gift cards can be used online as well as in retail stores, and the cards are reloadable. In addition, Best Buy gift cards can be used for purchases including Geek Squad services or Magnolia Home Theater stores.

Best Buy is also offering a new type of gift card, the Pitch In Card, which is a reloadable gift card that allows family and friends to contribute to the overall value of the card, which can then be used to shop both in the store and online. The recipient can then purchase large-ticket items as the card balance accumulates. The card is free to create and never expires. Contributions to the card can be made online or at an in-store kiosk. Lost or stolen cards can be replaced for free.

Home Depot is one of the nine current members of the Retail Gift Card Association, and like Wal-Mart, they offer electronic gift cards as well as traditional gift cards. Home Depot gift cards may be used towards installation costs, design fees and deposits for special-order items in addition to merchandise. They cannot be redeemed for cash, however, and the cards are not reloadable. Electronic gift cards are available in nine designs, or can be customized with a photo. They can be printed for use in the store or used online. Once the electronic gift card is purchased, the value of the card cannot be changed.

ITunes is another popular issuer of gift cards. Cards can be purchased online, where they can be emailed, printed or mailed to recipients, or you can buy gift cards at various retailers including Walgreens, Wal-Mart, Starbucks and Apple stores. Traditional cards are available in denominations of $15, $25, $50 or $100, while online gift certificates range from $10 to $50. Purchasing a gift certificate requires the creation of an Apple account and downloading the iTunes program to your computer, which is free but time consuming for those who aren't already using iTunes. Neither type of iTunes card carries any fees or expiration dates, but the card cannot be replaced if it is lost or stolen.

Other cards do not have fees or expiration dates, but do have limited usage. Starbucks gift cards, for instance, cannot be used at some Starbucks kiosks in airports, supermarkets and bookstores. American Airlines gift cards can't be used for upgrades or with travel agents, at airport ticket counters or for flights originating outside of the U.S. In addition, the gift card's value can't be used to pay for upgrades, flight changes, excess baggage fees or toward the purchase of an AAdvantage Awards ticket or any associated taxes or fees. While there are no expiration dates or dormancy fees associated with American Airlines gift cards, lost or stolen cards cannot be replaced.

Store gift cards are generally limited to use with the issuing store, though most can be used at the retailer's website as well. Some stores are pushing the envelope in order to make their cards more flexible. Gap GiftCards, for example, can be used at any Gap-owned store (Gap, Old Navy, Banana Republic, Piperlime.com, Athleta) as well as online. Up to two gift cards can be used for an online purchase, so customers are able to combine two smaller-valued cards to pay for a larger order. Gap, Banana Republic, Old Navy and Piperlime.com gift cards are available in preset denominations ranging from $10 to $500, depending on the card. Lost or stolen cards are replaced free with an original purchase receipt. The Gap Options card is similar, but available only online; it's redeemable at any of the Gap-owned stores.

Similarly, gift cards for Williams-Sonoma can also be used at sister stores Pottery Barn and West Elm, either in the store or online.

Retailers are finding more ways to attract customers with their gift cards. Many stores offer a wide variety of designs for different personalities, interests and occasions. Target alone has 70 different gift card designs, 22 of which have special features such as animation, music or attached gifts. Target's gift cards, like most retailer-issued cards, do not have expiration dates or fees, and are available in denominations ranging from $10 to $1,000 for traditional cards and $5 to $5,000 for electronic cards. Electronic cards are only usable online; they are not redeemable for purchases made in Target stores. Target will also replace lost or stolen cards as long as they are presented with an original or gift receipt.

Amazon.com offers three gift card options that can be used to purchase the millions of items. Amazon.com gift cards may be emailed, mailed or printed at home, and none carry fees or expiration dates. Shipping is free for plastic cards. Amazon.com gift cards come in dozens of designs in any denomination between $5 and $5,000. Electronic gift cards can be scheduled in advance for delivery on a holiday or other special occasion. These gift cards, however, cannot be redeemed for merchandise sold by third-party merchants on Amazon.com, so recipients should be careful to choose merchandise sold by Amazon.com when redeeming the gift card. Amazon.com gift cards cannot be reloaded, and lost or stolen gift cards cannot be replaced.

Experts say that in order to get the most for your money, be sure to match the store to the recipient. It is also important to know the prices at the particular store you are purchasing from and add an appropriate amount of funds, so that purchasing a gift is possible. These two steps reduce the risk of the money being wasted on unredeemed cards. Cristin Frederick, in an article for the Federal Reserve Bank of Boston, advises gift card recipients to treat cards as cash and use them sooner rather than later in the event of a future retailer bankruptcy.

E-gift cards

Most retailers with an online presence offer e-gift cards in addition to plastic cards. These cards are very similar to the physical cards, except they can often be personalized and sent to a recipient's email address within minutes. The only caveat is that, in some cases, they can only be used for online purchases. Check the terms before purchasing an electronic gift card; you'll want to make sure that your recipient knows his or her way around a computer and feels comfortable making purchases online. Sears, Home Depot, Nordstrom, Abercrombie and Fitch, and Kohl's are some of the stores that allow customers to print an e-gift card and use it in a brick-and-mortar store as well. E-gift cards at these stores can be used in stores, online and for catalog orders where applicable.

The Sears eGift Card is one of the more flexible e-gift cards available. You buy it online, and it's then emailed to the recipient. The card can be redeemed online or for phone purchases, but it can also be redeemed in any Sears, Lands' End or Kmart store as well. Sears e-gift cards never expire, carry no fees and you can check your card balance online. They can be purchased in denominations from $5 to $500.