Best Times to Buy - Complete Savvy Guide to Gift Cards

It is equally important for savvy shoppers to know how gift cards work. Basically they were introduced to gift but currently, people widely use it for normal shopping themselves as well. Whether hard card or digital they work the same way at the backend.

When you buy a gift card, you need to register and activate that card. The mostly gift cards are preloaded with funds you selected during shopping and you can also find reloadable gift cards in the market. When a gift card is activated, it is activated and loaded in the backend server of that merchant and just like a bank account, when you or recipient shop with that gift card it is debited to that preloaded fund account temporarily linked to that card till the end of funds.

When recipient swipes the card or enter the number or scan it at POS, the system validate the card identity number, verify it from the host server and after the verification of the card and funds, the merchant system approve and deduct funds or decline otherwise. If the transactional amount is higher than the balance in the card then different merchants handle this situation differently but mostly customer can split the transaction and pay the remaining amount through other gift card or credit card or even cash. If the card is not reloadable then it is disposed of when fund ends or if reloadable then recharge it to reuse.

All the gift cards are either a physical card or an electronic card. Physical / Hard gift cards (they are actually cards) are just like debit or credit cards, with displayed brand/bank name, expiry and face value.

And the electronic/digital/virtual/mobile gift cards (they are not actually cards) comes in digital form and code that can be saved in the inbox and mobile app. Either shape can enjoy the same features and usage limitations.

The electronic or digital gift cards are being popular because of more convenience & secure to shop, store, carry and gift.

–    The user can buy a digital gift card online and the same is delivered within an hour with no extra cost.

–    Stored in an inbox or in a mobile app and don’t need to carry in your wallet

–    They are more secure as compared to the physical card. They don’t lose with your wallet. Phones and gift card apps are generally passwords protected if talk about the mobile lost. Low possibility to be used as anonymously as they are linked to more identifications; an email address, credit card number and physical address etc. so it lost can be traced and replace easily.

–    The chances of fraud are low as they don’t have a physical shape, packing, code-strip or racks; they are created, processed and delivered in an automatic secured system.

If you can sacrifice the classical-feel of holding a hard card then a digital gift card is ideal to buy, use and gift.  The reason they are getting more popular day by day is their convenience to use solely because of smartphone technology.

The whole process is easy; select the gift card and buy online, delivered directly into your inbox (text code or email) or into mobile-app, use code at checkout in online shopping or show the bar-code to cashier at POS to scan or enter the code or swipe the phone.

As their names disclose, the open loop gift cards are just like your prepaid debit or credit cards. We are talking about the usage flexibility of a gift card when we discuss open or closed loop.

Visa and MasterCard gift cards are open loop cards as they are good cash-equivalent and can be used in a wider selection of brands, stores, to withdraw cash and are mostly reloadable. They are more popular because of their flexibility. E.g. Happy Cards or MasterCard Gift cards. There is a reason why open loop gift cards come with some kind of fees, annual dues and other costs to enjoy the flexibility.

And close loop card is brand specific cards that a recipient can use specifically for that brand or merchant only. E.g. Abercrombie & Fitch Gift Cards. The brand family gift cards are also closed loop gift cards.

Before differentiating between happy and brand family gift card you need to know the difference of open loop and closed loop cards (it is discussed in the above section).

Brand family gift cards are brand specific cards; a closed loop that are redeemable at that brand or family brands only generally in the specific country where it is shopped (e.g. Old Navy gift card can be used for shopping at Old Navy, Gap, Banana Republic, and its other family brands). A brand-specific gift card (e.g. Buckle) is limited to just a single brand but a brand-family gift card offers wider usage to whole family brands.

The happy card is relatively the new product to tackle the limitations of brand gift cards as they offer a wider selection of ways to use a single gift card. They can be used generally at various brand and stores specified in terms and conditions with more flexibility just like a bank issued visa debit card.

Here flexibility means the gift card options to use. All open-loop gift cards are flexible gift cards with a wider selection to redeem. The Visa Gift Cards or MasterCard Gift Cards are flexible and open loop gift cards as they offer more options to use the card. And all closed loop cards are non-flexible gift cards as they come with limited options to use for consumers.

There is a reason why you find more brand-specific cards on discounted markets than flexible gift cards. People resell their closed loop gift cards for cash as discounted rates in the secondary market of gift cards because they are not able to use it for other merchants as in case of flexible/open loop gift cards.

The retailers/merchants’ gift cards are closed-loop cards, issued by a brand or merchant and are mostly closed loop cards so with limited options to redeem, not reloadable and often comes with no fees. Whereas the Visa gift cards are you prepaid debit card equivalent and offer a wider range of redeemable options across brand and can be used to withdraw funds from ATM.

The gift cards (hard card or electronic cards) are debit cards issued by merchants and banks to use as payment source with expiry and/or fees.

Whereas the gift certificates differ from gift cards as they are generally issued by a physical outlet (brand or business establishment), signed and authorized on a paper document as a voucher (Not actually card or e-certificate)) for the payment of their future products or services. It usually comes with no expiry and fees. The gift certificates normally serve for a specific product or services by a business establishment and are more customizable.

The consumers shopping behavior with gift cards is interested and different from what they use to behave in cash or credit card. Market research shows that:

–    Consumers spend more freely the gift cards balance than cash or credit card

–    As mostly gift cards are received as present so people feel it free money to spend

–    About 20% of Gift cards remain unredeemed that calculate about $10 Billion a year in the US only.

–    Savvy shoppers are keener to enjoy double discounts when they do discounted products shopping with discounted gift cards.

As discussed above, the gift card shopper tends to think gift cards as free money or feel huge discounted shopping when using a gift card received as a present, so they overspend as general human behavior. And on the other hand, a large percentage of cards remain unredeemed of which merchants have received money. These are the reason why merchants are happy with gift cards shoppers.

Walmart | JC Penney | Best Buy | Amazon | Macy’s | Target | The Home Depot | Office Depot | AEO | Old Navvy | Lowe’s | Red Lobster | Toys R Us | Game Stop | Cabela’s

Shop the hard gift card and deliver it directly to the recipient or after reasonable relative packing or decoration. Shop online the e-gift card that you can send to recipient inbox or mobile app. Be more vigilant and verify twice when receive or send an e-gift card.

–    Send the e-gift card to the recipient most used technology.

–    Ask the active email address or App id when to email the e-gift card and verify from the recipient after you sent

A whole gift card secondary market is emerged because of the need to resell unwanted gift cards people receive.  People tend to resell more of their closed loop or brand-specific gift cards if they don’t want need to shop that brand. You can have upto 90% of the cash value of the gift card you sell on discounted stores. There are many ways to use unwanted gift cards.

–    Sell it on discounted stores to recover upto 90% cash value

–    Resend it someone as a present

–    Buy a present with it for someone

–    Donate it or buy something with it to donate

Whatever you do, must do it with your unwanted gift cards and simply don’t leave them unredeemed just because you don’t want that brand product.

No, you cannot resell your iTunes gift card after you have activated as they are linked to your iTunes account and cannot be transferred to other users. So if you have activated an iTunes card then find the valuable ways to spend it yourself. May be in future they allow sharing it with other users?

Gift cards were introduced as an alternative for giving present but it never means they are only to gift others. Now they are being used equally for shopping as good cash-equivalent. Savvy shoppers can use gift cards to save thousands of bucks in their routine shopping if they are enough smart-savvy-shoppers.

a. Controlled Spending:

Buy gift cards in bulk and manage them as per your routine shopping wish-list for a specific time. You may have the gift cards received as present or rewarded by brands so manage the stockpile of gift cards and organize them exactly following your wish-list which is the most important and the first task of savvy shopping. Then savvy shoppers do use these gift cards for most of their shopping in a very moderate manner and over-spending ends because of limited value a gift card serve.

b. Double Discounts:

For unwanted gift cards, there is fully efficient secondary gift cards market established for to shop and sell discounted gift cards upto 20% off. From there you can buy a gift card with face value $100 for just $90. And then you use this already discounted money to shop a discounted items upto 50% off can save you double bucks.

c. Gift card back rewards and Promos:

Brands offer special gift card promotions and rewards, especially in the holiday season. You can have a cash back or gift card back of $10 for every purchase of $100 or some merchants offer reward points when you use gift cards to shop that you can use for further buying of items on wish-list.

d. Gift card discounts:

Merchants appreciate the use of their gift cards because of the ultimate benefits a business derives from gift cards. So they offer special gift cards discounts on regular items which a savvy shopper can only avail if he/she use a gift card as a payment source.

The best time for me to buy gift cards as a savvy shopper is the end of the holiday season.

 It is simple; people shop more in the holiday season and spend more of their gift cards. In that season people also buy and give as a gift a lot of gift cards because of discounted prices. After the season is over, people enlist all unwanted gift cards on the secondary gift card market where savvy shoppers can buy at huge discounts because of the low demand as the holiday season is over.

There is a hassle involved as you buy, register and activate a gift card. Does it worth the hassle for a minimal discount (usually on discounted gift cards) from $1 to $3 of $50 gift cards?

It worth the hassle only if you are a savvy shopper who can manage to shop mostly with gift cards and have an organized stockpile of all gift cards (gift cards received and discounted purchased) matching your wish-list.

The ideal and simple formula for savvy shopping I adopted for a gift card is to use your discounted gift card for discounted shopping (double discount).

Like credit cards and other financial instrumental frauds, gift cards scams are real and no exempt from frauds. The positive aspect here is comparatively the limitation of fraud because of the limited monetary value in gift cards. The gift cards frauds are preventable so by understanding and due diligence we can avoid these fraud schemes. Following are some cases of gift card frauds and they are never exclusive.

1. Reselling only code of plastic card:

In gift card secondary market, it needs to mail card when a buyer ordered your listing. Sometimes, online resellers accept gift card codes and don’t stress to mail actual plastic card just to avoid expense and time. But scammer can exploit this situation just by selling the code and after the balance is verified by reseller and payment received they empty the card immediately by making a planned transaction. Avoid this fraud by confirming the balance of gift card shortly after you purchase from the reseller and try to buy gift cards from trusted resellers.

2. Stolen and Counterfeited Gift Cards:

In this common type of fraud, the counter person in a store can be involved. They can steal the gift card number and resell and use it making that card expire still in packing. If the PIN is there to safeguard, it can also be tempered and noted smartly. In this case, when you buy that gift card, activate it the scammer having the number and pin can use it as his/her own anywhere without your knowledge and permission.

3. Salesperson activation fraud:

When you shop a gift card and handover to the salesperson to activate in the system it is the time the fraud can happen. They can note the card number (and PIN) in the first scenario and secondly, they can activate the card and handover you the other empty card from somewhere under the POS. So keep an eye on the counter person and match the number with what on receipt and confirm the balance after activation.

4. Phone Call Scam:

They will phone call you being someone from some Govt. agency and investigate about a gift card or even they can ask for payment referring to some kind of fine or ticket. They can create this drama through emails and stress to pay immediately with gift cards. All you need is to confirm yourself from a legitimate source before obeying these calls or emails.

Tip: Check the safety procedures involved in the doing transaction from a store and check out the warranties and guarantees policies on the sites you are planning to buy gift cards from.

If you are involved in a potential scam: Go for Internal Revenue Service (IRS) Consumer Alerts and The Federal Trade Commission.

Generally, the gift cards are expired in 5 years after activation. It is a general law but not thumb rule for all gift cards in the market. There are a variety of gift cards and they all come with their own expiry, features and terms & conditions.

By law, it is must for all gift card issuers to clearly disclose the expiry on the face of a gift card. The gift card expiration laws can be different in different states. So it is important for savvy shopper to clearly check the expiry, limitations and terms & conditions with a gift card before making the transaction.

Trends are moving from plastic cards to e-gift cards and they are being redeemed using mobiles.

The gift cards can be stored in mobiles (whether e-gift card or hard card). There are mobile apps in the market which can be used safely and effectively making the whole process of storing and using gift cards easier. I.G. Gyft App

Yes, you can personalize gift cards; add personal touch, design or images on the card background of someone you are planning to gift. The name and other details can also be added to a card in respect of special event or purpose you want to use that card. Not all but most of the merchants and special gift card stores can add a personalized touch on request and the rest of packing and delivery is quite customizable.

All the gift cards need to be activated and registered before making any transaction. This step involves two processes, one is activation and the other is registration.

Activation of a gift card is must for every card whether e-gift card or hard card. Without activating it you cannot use it for online and in-store transactions. Most of the store purchased gift cards are activated before handing over but the online shopped gift cards are delivered un-activated so you need to activate first. All cards are activated by issuing authority and see the back of the card for the activation process.

And the second process is registration. Registration means actually linking the card to your profile making you the legitimate owner in issuing authority record. It is a security process more than a transaction process. With an activated gift card, Visa gift card and MasterCard gift card you are able to use it for limited options mostly at physical locations. But if you want to use it online and everywhere it offers then you have to get it registered too.

Use your actual name and address to register your gift card because the transaction may decline if the merchant verification system unable to match the name and addresses on the card with what you provided, for security reason.

Most of the gift cards especially visa gift cards cannot be used to get cash.

If you want to withdraw cash from ATM then it is possible only with bank-issued prepaid visa card. However, you can get cash back with the merchant gift card on merchant POS if the transaction is being processed as cash. The second option is simply to sell your card in the secondary gift card market and get upto 90% cash back immediately. Some gift card issuers allow using a card for ATM withdrawal so always check the terms and conditions before wandering around.

The first step is to safeguard unauthorized access to your gift cards. Store and manage your hard gift cards safely in the wallet or somewhere else can guard against the theft. And in case of e-gift cards, safe handling of your mobile and password protected apps are must and enough to safeguard the unauthorized access to your stockpile of gift cards. Currently, there are Apps in the market which you can use to store even your physical gift cards and use them electronically.

The second important step is to protect the possible loss in case of lost cards and that is by proper registration. If activated and not registered then your gift card is as liquid as cash; whoever holds it has it. Always get your gift cards registered against the real name, identity, current address and secure it with PIN so you can safeguard the possible unauthorized use and recovery of lost gift cards.

Taking and holding receipts of the gift card from its buying to transactions is surely going to help you in a possible imperfect situation. So it is good practice to hold all receipts so that you have some proof.

There are many reasons that can cause a gift card not working and decline the transaction. If your gift card is not working you must check the following reasons to find out the issue.

1. Is it activated?

You must have to activate your gift card before use otherwise it will decline. See the back of the card for the activation process. It may need upto 24 hours to activate after your request so check it too. The no-activation or improper activation is the main cause of gift card decline.

2. Is it registered?

You need to register gift card if you are trying to use it online or otherwise than in-store.

3. Are you using it following the terms & conditions?

Must follow the terms and condition of a gift card before using it.

Registering and using its PIN correctly and for options, as declared by terms with limitations is what you need to care using. If a gift card is not working at one merchant it is quite possible that it will work on others. E.g. you are trying to withdraw cash at ATM with a store gift card. Take help from nearby store person for POS transactions, if needed or ask from issuing authority.

4. Transaction amount mismatches the remaining balance

One of the main reasons for the decline is the mismatch of the transactional amount with what is your remaining balance on the gift card as they don’t allow overdrawing. You can split the transaction in this situation and pay the remaining amount in cash, with other gift card or credit card as a second payment source.

5. The cashier is processing transaction as a cash

Some cashiers as common practice or upon customer request process the transaction as cash but it is prohibited by law and possibly can be declined by the issuing authority. Request cashier to process as a gift card transaction.

6. Pre-Authorized Percentage Hold Decline

It is also a practice during processing to hold a pre-authorized percentage of bills usually on restaurants to cover a gratuity and pre-authorized full bills on gas stations that can cause an insufficient balance decline. Request to process the gift card for the exact bill and settle the other payments in cash can solve the problem.

7. Geo-Specific Gift Cards

The gift cards are usually geo-specific that you can use them in the country where you shopped, so check it or confirm from issuing authority. There are international gift cards or traveler cards available if you need.

9. The card is okay and just a system failure

There might be a system failure at card issuing authority end when you try to activate or confirm balance etc. If this is the case, relax and try later or directly use your card for any transaction it can surprise you.

10. Unauthorized Brands, Products, Sites, Business or Transactions

The decline can be the result of ban the gift card issuing authority put on the card, for some brand, products or site. Be fully aware of its T&Cs.

Yes, you can do partial payment with gift cards especially in-store. Ask the cashier at POS before making a partial payment because it depends upon the facility a merchant has.

Normally, the gift cards currently in use whether merchant or bank issued are not reloadable but now reloadable gift cards (not actually gift cards) are being offered by merchants and banks. It works like a prepaid debit card and offers a complete set of benefits to consumers. They usually have some kind of activation and yearly fees but the benefits truly worth these charges.

Yes and No. It depends upon the card type and issuing authority. Generally, the gift cards fees can be: Shipping fees, activation fees, dormancy or non-use fees, reload fees and card replacement fees etc.

Merchant issued gift cards are closed loop and merchant benefits from gift card as kickback when the consumer shops their product. So they usually don’t charge the above set of fees. However, the bank issued open-loop gift cards come with some kind of fees because they don’t get margin in selling items. The bottom line is gift card fees laws are different across states but all states required to disclose all the fees and charges in terms and conditions clearly.

Check the fees before purchasing the card because it is the only way gift card worth (financially) less than its face value to the consumer. In general speaking visa gift cards cost more than the merchant-issued gift cards because of the costs associated with them; activation, non-use and replacement etc. If you weight more the convenience and flexibility of use than the associated costs then open loop gift cards are better than closed loop card.

Yes, most of the time, if you are using the merchant gift card in combination. The merchants offer the partial payment for a single transaction; split-payment transaction. You can pay with multiple gift cards, credit cards or even the combination with cash to cover the total payment of a transaction. Today’s sophisticated POSs and checkout systems are equipped with tools to handle the split payment transaction.

The best practice is to ask the POS cashier before making the partial payments to avoid later embarrassment. When shopping online, if the system offers at the checkout page, enter gift card in the gift card box and visa debit or credit card in the second field. (Split with a gift card and bank issued visa card)

It depends upon the sophistication of the checkout system and the customer service they offer to customize your requirements.