While gift cards make a convenient present, these cards and vouchers have been the subject of numerous complaints to CHOICE over the years.
About $1.5 billion worth of gift cards were purchased in the last financial year. About three in four participants in a recent CHOICE survey told us they’d received at least one gift card in the past 12 months, with a similar proportion giving one as a present in the same period. More than half experienced the biggest pitfall of gift cards – it expired before they were able to use its full value. We looked at 15 gift cards from major retailers and found three to recommend. We also examined how stores handle lost and stolen cards, and other drawbacks.
Under new regulations in the US, gift cards must have an expiry date of at least five years – much longer than almost all the cards we looked at. Under those regulations, good disclosure of pitfalls such as fees is also mandatory. In Australia, unfair contracts legislation can be used to take action against particularly unfair terms and conditions for gift cards. If you have any complaints, please email us at firstname.lastname@example.org or leave a comment.
Traps to watch for
- Expiry dates Will the card be honoured after this date? Of the gift cards we looked at, the Bunnings card does not expire at all. David Jones say they will exchange expired cards for new ones and JB Hi-Fi say they will always honour their gift cards, even after they’ve expired. A large number of card providers told CHOICE they allow a grace period (usually one month) after the card has expired.
- Be especially wary of cards that state only their issue date rather than the expiry date (they usually also state the time period for expiry after the issue date), which is the case for Coles, Coles Group & Myer, JB Hi-Fi, Big W, iTunes, Village Cinemas, Westfield and Myer gift cards.
- You should also be able to conveniently check the remaining value on the gift card. While most allow you to do so via a website or dedicated customer phone number, others require you to check the balance in-store.
- Gift cards not honoured for transactions less than a specified amount You cannot use the Dymocks gift card for amounts less than $5, so if there is $4.50 left on your card and you want to buy something for this amount (such as a greetings card), your only option is to buy something more expensive and pay the amount above the value on the card. While none of the other cards we looked at have such conditions, there are those that cannot be used for a sale under $10 or even $20.
- Lost or stolen cards You normally 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 card you’ve bought, sometimes for a fee (see table, opposite). Conditions apply, so hold onto your receipts for gift cards and jot down details such as the card number.
- Restrictions about which shops accept the card You can usually only use a gift card in a specific store or group of stores, such as the Coles Group & Myer gift card and Woolworths Wish card. Shopping centre cards, such as Westfield, can be used in a wider variety of stores, but note that it’s not accepted by all stores in a Westfield shopping centre – in particular, none of the Coles group (except Kmart), Myer or Woolworths group stores accepts it.
- Will you get change? For most cards, the answer is no, but you can use the card again if you haven’t used the full amount. Of the cards we looked at, only the Bunnings card allows change up to $9.95, providing you with a new gift card for the rest of the difference.
- Fees and charges Fees are mainly a problem with Visa and MasterCard gift cards. Most retailer cards have no fees, with some exceptions; the Westfield gift card charges a $1.95 issue fee and, while Red Balloon allows an extension of their experience vouchers for up to three months, there is a hefty $10 charge per month for this or a $30 charge for a one-month extension if the voucher has expired.
Beware Visa and MasterCard exit fees
Visa and MasterCard gift cards are available from your bank, retail stores or online. They can be used at most retailers or businesses that accept Visa or MasterCard, so they’re valid at many more places than other gift cards. The downside is their fees. There is usually a purchase fee ($5.95, for example), and there may also be fees of up to $4.50 for checking the card’s balance over the phone (less expensive or free online, or automated phone services may be available). These gift cards usually expire after 12 months and any remaining balance is lost. They usually must be treated like cash (most lost or stolen cards won’t be refunded), although a few cards can be replaced, so check carefully. Some cards allow you to reload them and don’t expire. However, read the fine print carefully as reload and monthly fees can apply, as can a transaction fee every time you use the card. The retailer may also charge you a surcharge for using a Visa/MasterCard.
Converting unwanted gift cards to cash
A new website, www.cardlimbo.com.au, allows you to sell unwanted gift cards from about 100 retailers for 60% to 90% of their value and buy second-hand cards for 70%-96% of their value. Cardlimbo also allows you to donate gift cards to charity.