Trade your gift card for a store you actually shop at.
Photograph by Robyn Beck — AFP/Getty Images
By Jean Chatzky
November 10, 2014

Ho, Ho, Ho? Or Bah Humbug? I’ve got to say when it comes to gift cards – which for the eighth year in a row are the most requested items for those celebrating the holidays, according to the National Retail Federation, I’m of mixed feelings. Gift cards are no doubt among the most useful items to put under the tree; the recipient gets to pick out something they actually want. But they’re so unromantic. Does anyone get a little thrill, a tingle of excitement from unwrapping yet another gift card? (If you do, please let me know.)

That said, I’m a realist. You want gift cards. You got ‘em. But this year, there are a few new things you need to know to get the most out of them.

There may be nothing to unwrap. The growth in the overall gift card business will continue at a rate of about 6% annually, according to the NRF. Overall, it’s projected to be a $140 billion annual business by 2016, according to CEB Tower Group. But the growth in digital gift cards is skyrocketing, growing at a rate of 200%. These cards aren’t physical, rather they’re stored in your computer or mobile device and can be used to make purchases from there.

This is actually good news for millennials, says Jeanine Skowronski, analyst for Bankrate.com. Millennials are more than twice as likely to lose gift cards than older people (some 40% of 18 to 29-year-olds cop to losing a gift card in the past according to Bankrate research). Digital gift cards are much harder to lose, because they live in your apps and your email. And for those romantics out there like me, look for ways to personalize them by tagging on photos or special messages before you press send.

Be wary of exposing your recipient to email blasts. One of the potential negatives with mobile gift cards, Skowronski notes, is that you’re “usually” asked to give the recipient’s email address or their phone number. “For me as a consumer,” she says, “I worry that the person wouldn’t want me to give this information away to retailers.” Generally, though, she says there will be a box you can check to opt your recipients out of future email or text blasts. Look for it, please.

Fees are still an issue. According to the Bankrate study, when baby boomers and Generation Xers are the gift-givers, they prefer general “all purpose” gift cards over those that are tied to a particular store. That’s nice for the convenience of the recipient. But pay attention to the fees. They’re higher on these sorts of cards and tend to rise with the value of your gift. On Visa and Mastercard gift cards, for example, they’re $2.95 for gifts of $20 to $74.99, $3.95 for gifts of $75 to $249.99, and $4.95 for gifts of $250 to $500. Doesn’t sound like all that much, but on a $20 gift card you’re talking about an add on of 14%.

The secondary market is more robust than ever – and you can make use of it whether you’re buying or selling. If you’re on the receiving end of a gift card – mobile or terrestrial – that just doesn’t fit, don’t hesitate to resell it. You’re not going to get 100% of the value, of course, but if you weren’t going to use it anyway something is better than nothing. The amount you get depends on the desirability of the merchant.

At Gift Card Granny – which aggregates gift card offers – you can see that you’d get about 90% of the value for a Costco gift card and 80% for one from the Disney Store. Kate Spade will only net you 56% back. On the flipside, if you’re just starting your holiday shopping, one way to save significantly is to buy other people’s unwanted gift cards and use them to make your purchases. Again, savings run the gamut from around 7% at Nike, to 10% at Bloomingdale’s and to 20% at Massage Envy. If you do go this route, once you shop, check its balance immediately, says Kendal Perez, spokesperson for giftcardgranny.com. “Most retailers have that element built into their sites. From there, you’re good to go.”

Kelly Hultgren contributed to this report.

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