Gift Cards :: The holiday shopping solution

It's a week before Christmas and you've yet to do any shopping. Foolishly, you barely glanced at the EDGE Holiday Gift Guides and now you feel like you're screwed- and not in a good way. What to do? How about gift cards?

Yes, gift cards aren't the most personal of presents - they're one step above cash - but they may just be perfect for many on your list- e.g. the ones who are difficult to shop for. Plus, they make perfect stocking-stuffers, and if your family lives on the other side of the country, they're much easier to pack than a Wii Fit (or even one of those G-D- hamsters). A word of caution: we don't recommend gift cards for significant others, unless you enjoy sleeping on the sofa.

Something else to keep in mind: if there's any doubt about whether your intended recipient will be able to use the card in the next few months, avoid gift cards for small, independent, or "struggling" stores. Given the economy, unless you know he or she will run out on the 26th and use (the entire amount on) a boutique card, it's better to stick with one from a major retailer. Tiffany's and Nordstrom aren't going anywhere (at least not anytime soon, that we know of...), but the windows on Madame Carolina's Fabulous Jewels might be boarded up come January 6th. (Just think of those useless Circuit City cards- and the unlucky people who received them as gifts last year.)

You're better off giving a gift card from a credit card company or bank. TowerGroup, a financial services research company, reports that while store gift card sales are declining, sales of those from banks are rising. The most popular may be American Express Gift Cards; the company reported that 58 percent of people surveyed said they planned to buy one. (No word on whether the group surveyed were AA cardholders, a likely possibility.)

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While we're on the subject of the drawbacks of gift cards, know that most retailers view gift cards as major profit centers, thanks in large part to the number of receivers who don't use them, and - in less cases today than years past, thanks in part to (rightfully) scathing media expos�s - copious, complicated, and confusing fees levied on both the card buyer and the recipient.

An estimated 10 percent of the overall value of gift cards purchased - more than $5 billion this year - will go unspent, according to the Baltimore Sun; no small amount. And while a few gift card providers no longer impose these hidden fees and early expiration dates, it's not uncommon for banks to charge up to $7 simply to purchase a general use card. Additionally, some cards come with monthly fees as high as $5 if a balance remains after 12-months; it's a good idea to tell your gift recipients to spend the full amount within a few months to avoid fees. (If you're a bit OCD or worried that your giftee hasn't spent his or her card, a follow-up inquiring what lovely item he or she picked out is a perfectly polite way to help avoid becoming a statistic.)

Although it won't help with cards given this holiday season, next August a federal law will go into effect banning expiration dates within five years and inactivity or service fees so long as the card has been used in the previous 12 months. (Although it may take them ages to do it, every once in a while, it seems, our government can do something effective for the masses.)

Finally, if you do plan on giving gift cards for the holidays, know that although you may like the convenience that they offer, many people aren't always crazy about receiving them. A recent Consumer Reports survey of 1,000 adults found that while nearly half intend to buy a gift card this holiday season, only 15 percent wanted to get one. Additionally, a National Retail Federation survey shows that 77 percent of those who will purchase a gift card are looking for something practical, not personal, to give in a bad economy.

The moral of the story? A bit of research can help ensure that your gift (card) doesn't go from a nice surprise to a disappointing letdown.

For a list of state laws governing gift cards, the Consumers Union website is an excellent resource.