Are gift vouchers a waste of money?
With high street shops struggling, should gift vouchers be on your xmas shopping list as you prepare for Christmas?
At Christmas, many stumped shoppers opt to give people gift vouchers. But following the recent debacle with Comet going into receivership and its gift vouchers being suspended then reinstated, are gift vouchers a good purchase?
Gift vouchers are a win-win product for retailers, they get money in exchange for nothing in the first place and may, or may not, one day have to hand over some goods.
In 2011, £4.5 billion was spent on gift cards and vouchers in the UK but of that amount 6% will never be redeemed, according to the UK Gift Cards and Vouchers Association. That's a staggering £270 million going into the pockets of retailers in return for nothing.
The really surprising thing is that so many people are spending money on a product that has no discernible benefit, other than tying someone to buying something from a particular store.
If you have a voucher or gift card with a retailer that goes bust, it is up to the administrator whether it honours the vouchers - there is no legal obligation to do so, and most don't.
And money spent on gift vouchers isn't protected under the Financial Services Compensation Scheme either. So stick to cash this Christmas.