Christmas is just around the corner, but chances are you still have a fair few people you need to buy gifts for. It could be because a friend or family member is just impossible to buy for, or perhaps you’ve not got around to shopping yet. Whatever the reason, the old standby is often a gift card.
But while gift cards may be an easier option than a “partridge in a pear tree”, we’ve analysed the hidden rules to highlight seven “swans a-swimming” reasons why you’d want your true love to just give you the cash instead.
And if you receive a gift card, Moneywise also explains how to avoid losing out on the money – and even how you can make a profit on it.
1. Most gift cards expire
I’m sure you’ve found a gift card buried at the bottom of a drawer at some point, only to try use it and discover it’s no longer valid. Of the 12 popular gift card providers we investigated – Amazon, Arcadia (which includes Topshop and Miss Selfridge), Argos, Apple’s iTunes, Cineworld, Currys/PC World, Debenhams, House of Fraser, John Lewis, Marks & Spencer, Pizza Express and Starbucks – only Starbucks and iTunes had no expiry date, with most only lasting two years from purchase or their last use.
A further frustration with many gift cards is that the date isn’t printed on the card, removing the visual nudge that could make you spend it. And if you don’t use it in one go, it’s easy to lose track of the remaining balance.
With all the gift cards we looked at, you can check the expiry date and balance online or in store, though it’s not always easy to find where to do this online. For example, Argos has hidden the details on its payment page, so you have to go through the checkout process to find out.
2. If you lose the card, you usually won’t get your money back
Although online retailers Amazon and iTunes transfer the entire balance to your digital account when you enter the gift card code online, the rest in our study retain the funds on the card – so if you were to lose the card, you’d lose the money.
If possible, register your gift card online as it offers you the ability to put a stop on the missing card and get a new one issued. In our study, only Arcadia (the company that owns high street clothing retailers such as Topshop and Burton) and Starbucks allow you to do this.
3. You don’t get the protection you get with credit and debit cards
Spending with a credit or debit card can give you some advantages over gift cards. Section 75 of the Consumer Credit Act protects credit card purchases over £100 if something goes wrong with the good or services you buy, while the Chargeback scheme is a refund route if you’ve problems with credit card purchases under £100, or with debit card spending.
If you pay by gift cards, or cash for that matter, you lose this protection.
4. The card could be worthless if the store goes bust
We’ve seen a succession of high street staples shut their doors over the past few years, and when this happens the administrators don’t have to honour any gift cards.
Most recently, BHS would only allow gift cards to be used for half the total purchase price, with the rest covered by another form of payment – forcing people to spend money so they didn’t lose the value of the cards.
But often shops closing down just stop accepting outstanding gift cards outright. HMV, Jessops, and Peacocks all made gift cards and vouchers worthless overnight when they entered administration.
It is also unlikely that buying gift cards on credit card and using Section 75 would help you get your money back in these situations, as gift card balances are usually far less than £100.
If, despite this, you still want to give a gift card, it would be wise to avoid any retailer that appears to be struggling – perhaps consider a ‘multi-shop’ gift card, such as the Love2Shop and One4all gift cards instead. You can also get Visa, MasterCard, and American Express pre-paid cards. However, some of these come with activation fees and monthly ‘inactivity’ charges if you don’t use them.
5. Your shopping is restricted
You can’t always use physical cards online and e-cards can’t always be used in-store. Although most of the cards we looked at allowed you to use both, notable exceptions were digital John Lewis and Cineworld e-vouchers, which can only be used online.
Most of the brands are phasing out paper vouchers, but if you happen to still have Marks & Spencer or House of Fraser gift vouchers, they can only be used in physical stores.
6. Some retailers don't allow you to use multiple gift cards
This is more relevant if you’re saving up for something big and have asked for various family members to each give you a specific gift card.
As our table shows, it is common for retailers to limit how many gift cards can be used in a single transaction. Arcadia, Currys, Debenhams and Marks & Spencer all restrict how many you can use online, while Debenhams also limits your use to four in store.
7. Refunds can be tricky
If you buy with a gift card, it is highly likely the refund will be put back on to the same gift card. This means you need to keep hold of the empty piece of plastic just in case.
Alternatively, and this can be the case if you shop online, you might be refunded to your online account or with an e-voucher, preventing you from spending the money in store. Both John Lewis and House of Fraser do this.
Is cash a better option?
It might seem impersonal, but giving cash actually shows you’ve thought more about how the recipient will get the best use of the gift.
As our investigation shows, the risks associated with gift cards disappear when you replace them with cash. Whoever you give the money to will be able to spend it where they want, and there is less risk they’ll miss out by leaving it in a drawer, losing the card, or falling foul of a shop going under.
Still want one? How to buy a gift card for less
If you really want to purchase a gift card, there are a handful of ways you can get them for less. You can often save 2% on cards at one of the following:
- App-based gift card marketplace Zeek*
- Employee benefit websites
- Cashback sites
You can also get gift cards as a reward for using apps to complete surveys or exercise. Some of the most popular are:
- Receipt Hog
How to sell unwanted gift cards
It’s easier than ever to sell an unwanted gift card, though you will have to pay fees on your sale.
Zeek is a good option.You’ll pay a minimum of 7% or £3 on each card you sell, and you have to sell it for 10% less than face value.
An alternative with more flexibility is eBay, which usually has hundreds of gift cards and codes listed for sale. It’s easy to post your own gift card to sell, although it’s easy to get lost in all the noise. It’s free to list 20 items each month, but you’ll be charged 10% of the selling fee plus PayPal fees.
*Moneywise reader offer: New Zeek customers can get £3 off their first purchase by entering the code ‘MONEYWISE’. This offer is available until the end of this year, or until 3,000 people redeem it.