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The trouble with gift cards

They're a great last-minute Christmas present, but gift cards can also be a waste of money.
 
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01 .Gift card grief

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Aussies spend up to $2.5bn on gift cards for family and friends every year, and nearly 90% of us received a gift card or gave one as a present in the past 12 months. But many gift cards expire too soon and come with strings attached like hidden fees and conditions – leaving many recipients empty-handed.

In fact, one in three of the 735 respondents to our survey of CHOICE members had lost the full value of at least one gift card in the past three years.

Gift card expiry date

Of those who took our survey, 60% had problems with gift cards, and premature expiry was the biggest issue. NSW Fair Trading Minister Matthew Mason-Cox tells CHOICE that early expiration is the number one complaint made about gift cards.

Mason-Cox recalls a consumer complaint where a retailer didn't honour a gift card just one day after it expired. "If the card has expired, then legally the retailer doesn't have an obligation to honour it," he said. In this case, the retailer relented after Fair Trading stepped in.

But CHOICE has heard of many cases where complaints to the retailer fell on deaf ears. It never hurts to ask, though. Of our surveyed members who requested that an expired card be reinstated, about a third were successful. "I explained that I had missed their cut-off time, but the restaurant cheerfully honoured the card," one member, Gillian, told us.

NSW Fair Trading Minister Matthew Mason-Cox explains the main issues with gift cards

Check to see if the expiry date is printed on the gift card. If not, the trader must allow "reasonable time" in which to use the card under ASIC regulations. But the definition of reasonable may be very different for consumers and retailers. While expiry dates vary from a few months to two years, half of our survey respondents said a gift card should never expire.

Melissa, a member, expressed a view shared by many: "I don't understand why gift cards have such short expiry dates. The store has taken the money; they should be obliged to honour the card for a minimum of 10 years."

Short changed

In late 2011, the Commonwealth Consumer Affairs Advisory Council launched an inquiry into the gift card market and released an issues paper that highlighted the problems. But ultimately this had little impact, and consumer rights in Australia still lag behind other markets.

In the US, for example, gift cards can't expire in under five years and clear fee disclosure is mandatory. As a result, it's estimated that just one per cent of gift cards purchased in the US end up expiring or going unused.

CHOICE survey – key results

We conducted a survey of CHOICE members in late September/early October 2014. Of the 735 respondents, a large majority had given and/or received at least one gift card in the last three years.

  • $50 – the most popular gift card amount
  • $70average amount for giving a gift card
  • $90average amount for receiving a gift card
  • 50% – believe a gift card should not expire at all
  • 60% – had problems using at least one gift card they received in the last three years.

These were the most common problems:

  • The card expired before the full value was used.
  • It was difficult to find something they wanted to buy in the store(s) where the card could be used.
  • It was hard to check the balance on the card or there was a fee to check the balance.
  • Some stores/outlets did not accept the card, for example with a shopping centre card.

 
 

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02.Most popular gift cards for Christmas presents

 

Gift cards good and bad infographic


What makes a good gift card?

Expiry date

  • Choose a card that doesn't expire, like the Bunnings card (which tops our list of popular cards)
  • Go for one with a long expiry date like the second-most popular card – Coles Group & Myer – which is valid for two years. 
  • Or look for a card that is valid for at least 12 months, and preferably allows a grace period or even allows you to exchange an expired card for a new one – Woolworths Wish ticks all the boxes.

Balance

  • Ideally, you'd like to be able to check the card balance easily in-store, online and via phone. Beware of cards that charge a fee to check the balance.

Transactions

  • Ideally, you should be able to use the card for an unlimited number of transactions until you've spent the whole amount. Minimum spend amounts can be an issue, especially if the retailer doesn't give change, as there may be an amount left on the card that you can't use.

Lost or stolen cards

  • You usually have to treat your gift card like cash – if you lose it, it's gone. However, some retailers allow you to cancel and re-issue a lost card, sometimes for a fee. Conditions apply, so hold on to your receipts for gift cards and jot down details such as the card number.

Restrictions

  • You can usually only use a gift card in a specific store, so choose carefully – surveyed members said the worst cards to receive were for stores they don't shop in.
  • Cards that can be used in a group of stores, such as the Coles Group & Myer gift card and Woolworths Wish card, are better.
  • Shopping centre cards can be used in an even wider variety of stores, but they may not be accepted by all stores in the centre. For example, the Westfield card can't be used in Coles or in cinemas.
  • EFTPOS and Visa/MasterCard gift cards can be used at almost any retailer.

Fees and charges

  • Fees are mainly a problem with Visa and MasterCard gift cards. Most retailer cards have no fees.
  • Some cards like Westfield charge an issue fee.
  • Others may charge a fee for extending the expiry period or reinstating lost or stolen cards.




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