Gift-card pitfalls - Alabamas13.com WVTM-TV Birmingham, AL

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Gift-card pitfalls

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When you're stuck for a gift idea for someone who has everything, giving a gift card might seem just the thing. But consider this: Consumer Reports ShopSmart says many of those receiving gift cards never use them. Believe it or not, it's estimated that $1.8 billion worth of gift cards purchased last year are gathering dust and are likely to never be redeemed.

Though recent federal legislation requires retailers to honor cards for five years, monthly inactivity fees can kick in after a year, draining the value of the card long before it expires.

Gift cards with bank logos such as American Express or Visa can be used at a wide variety of stores, but there is often an activation fee or purchase charge, usually around $4 to $6.

Lost cards are another headache! Several big retailers, including Abercrombie and Fitch, Puma, and Aeropostale, say they won't replace them. Other retailers may charge you a hefty fee. For example, with the Visa card you can get at Simon Malls, you'll shell out $15 to replace it if it's lost or stolen.

Another drawback with gift cards: They don't have the same fraud protections you get with traditional credit cards. So that's another reason Consumer Reports says use gift cards as soon as you get them. And if you're buying a gift card, Consumer Reports says avoid those with purchase fees and keep your receipts in case one gets lost.

Sarah Panko

Sarah is the anchor/ producer for News Three First Edition at 5/4 central time. She also brings you the latest Consumer Reports on the Nightwatch at 11/10 central. More>>

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