Holiday Season Best & Worst Gift Cards

Best Holiday Gift Cards

Open Loop Network Gift Cards

The best holiday gift cards to purchase are gift cards that work on the open loop network. Open loop network gift cards "Master Card", "Visa Card" or "American Express" are accepted anywhere where credit cards are accepted. Closed loop network gift cards can only be accepted at locations listed on the gift card such as a Starbucks or Target Gift Cards. The open loop network gift cards give the user the ability to use the gift card virtually everywhere. The downside of an open loop gift card is that they typically charge higher fees associated with the acquisition or the inactivity of the card.

Worst Holiday Gift Cards

Dormancy Fees & Gift Cards Fees

The worst holiday gift cards to purchase are gift cards that have small acceptance networks and charge inactivity or dormancy fees. To see what fees are associated with the gift card look on the back of the card. It is required by law that all fee schedules are to appear on the back of a gift card. Closed loop network gift cards with small acceptance networks are also not a good idea. If someone has a taste for the service or goods then go for it. If possible get a gift card that requires remote activation to use the card. With a remotely activated card you can decrease the window of inactivity fees.

Gift Cards or Gift Certificates

Gift cards have the edge on the old paper "gift certificates" in that they're harder to lose and easier to work with. Charges or credits to the gift card can be electronically applied, and in California you could (in theory) keep a card forever, adding to or subtracting from its value as you please.

Almost every major retail or restaurant chain has moved from Gift Certificates to Gift Cards. Companies have also now gone to great lengths to create better packaging and artwork to cater to the holiday or occasion.

Gift Card Purchases More Popular Than Ever

Changed Shopping Habbits

Gift card sales are projected to reach an all-time high this year, according to Archstone Consulting in Stamford, Conn. Its September survey predicted total sales of $35 billion this year, an increase of 25 percent over last year's gift card sales. A study by Comdata Stored Value Solutions projected that in the 2007 holiday season, the average gift card buyer spent $203 on cards, a $17 increase from 2006.

The primary drivers for the growth of gift cards are that they're easy to buy, they're more socially acceptable gifts these days, and they ensure the recipient gets exactly what he or she wants. They're also becoming more accessible to shoppers. Simon Property Group, the nation's largest mall operator, offers more than 25 card varieties. And supermarkets like Cincinnati-based Kroger Co., the nation's largest traditional grocer, and Walmart are expanding their selection. Kroger just doubled the number, to more than 200, the gift cards available with a recent deal with Blackhawk Network Inc.

The popularity of gift cards has changed shopping habits, with three quarters (78%) reporting that they finish shopping faster and with less stress. Consumers recognize gift cards provide good gift-giving value, and a majority of those planning to give gift cards see the following features as important; they simplify holiday shopping (88%), are gifts that "you can easily take with you" when traveling for the holidays (85%), and allow recipients to choose what they most want (88%).

Are All Gift Cards Created Equal?

Is a $100 Victoria's Secret gift card really worth as much as a $100 Target gift card? Analyzing auctions of gift cards on eBay, Jennifer Pate, an economics professor at Loyola Marymount University, found gift cards from certain stores fetch consistently lower sale prices than others.

Pate's research suggests gift cards are less valuable to recipients when given for stores that offer less product variety and fewer locations. "The message for holiday shoppers is clear: unless you know your recipient's favorite store, give them a gift card for a retailer that provides a wide variety of options, such as Target or Home Depot," said Pate.

The study, which was published in the Journal of Economic Perspectives, also reveals the average gift card is resold with a 15% discount. "In other words, people who receive gift cards are willing to accept around $85 in cash in exchange for a $100 gift card. For many gift givers, this means that a $100 cash gift will go much farther than a $100 gift card," said Pate.

Ranked according to their resale value, the ten "best" gift cards are: Home Depot Gift Cards, Lowe's Gift cards, Office Max Gift Cards, Circuit City Gift Cards, Starbucks Gift Cards, Old Navy Gift Cards, Wal-Mart Gift Cards, Target Gift Cards, Staples Gift Cards, Best Buy Gift Cards, all selling for above 86% of their original value (a 14% maximum discount).

The five "worst" gift cards are: Tiffany & Co Gift Cards, Victoria's Secret Gift Cards, Abercrombie & Fitch Gift Cards, American Eagle Gift Cards, with Express Gift Cards coming in last at 74% (a 26% discount).