Consumer expert Clark Howard’s column appears here each Thursday in conjunction with Deal Spotter, a weekly print section in The Atlanta Journal-Constitution.
The sale of gift cards is up significantly from last year. But how good of an idea is it to buy them?
The National Retail Federation says shoppers are expected to spend $28 billion on gift cards this year, up from $24.8 billion in 2010.
Yet my position on gift cards has never changed. If you buy “at par,” meaning you buy a gift card at straight face value, you have made a bad purchase. You’ve taken money that can be used anywhere and turned it into scrip that can only be used at one particular restaurant or retailer. If that place folds, you’re out the money. That happens way too often.
Of course, gift cards can make sense in some situations. I’ll give you an example: I bought an iTunes store four-pack of gift cards at a warehouse club because my mother-in-law wanted to give them to our kids. The pack was being sold for $84, not $100, so we got more than we paid out. (Atlanta Bargain Hunter: More gift card tips.)
Some restaurants and spas will give you more value than you pay for, too. But the failure rate among those businesses can be scary. So here’s my advice: When you get the cards, use them. Don’t let moss grow under your feet.
By following my simple rule — a gift card that is above par is good, while one at par is bad — you can turn what could be a crummy purchase into a good buy.
Meanwhile, when the holidays are over and you’re not sure what to do with unwanted gift cards you were given, there are several websites that will allow you to convert them into cash — albeit not exactly at face value.
Try PlasticJungle.com, CardPool.com and GiftCardRescue.com. According to CardPool.com, for example, sellers can typically expect to make about 92 cents back on the dollar.
-by Clark Howard, Save More, Spend Less, Avoid Rip-offs
Find more answers to your consumer questions, plus Clark’s new book “Living Large in Lean Times,” at ClarkHoward.com. Listen to his radio show live 1-3 p.m. Monday through Friday on WSB 750 AM and 95.5 FM.