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We’ve often written about the fortunes trapped in the wallets of consumers who carry around gift cards for months.  In many ways, this is almost as bad as getting large tax refunds every year.

What makes this practice especially dangerous is what happened Friday.  Home furnishings giant Linens ‘n Things announced they were filing for bankruptcy protection.   That filing is a danger sign, but not especially problematic. The true problem came in the details of the filing when the company said that it would close 120 of its less than 600 stores.  About 15% of those stores are in California.

What does that mean for you?  If you’re in a California community with a Linens ‘n Things store due for closing, you might find some amazing deals.  After all, it is cheaper to sell products at a deep discount than to pack and move them.

But don’t hesitate.  You may very well find that the store in your town and surrounding towns is closed before you know it.

Reminder:  The email function on this blog is in the top right corner.  Be sure to send this to anyone to whom you’ve given a Linens ‘n Things gift card or someone you know who has one.  Smart consumers stay aware of trends, and gift card holders need to know if and when their local store is closing.

Posted under Finance

Before you purchase a gift card for someone this holiday season – or if you receive a gift card – there are some things you should find out. Different gift cards have different terms and conditions. Here are some of the most important terms and conditions that you should be sure to check, and that should be disclosed to you:

• FEES. Make sure you know whether fees may apply to the card. Some gift cards may not have fees, but others do charge various types and amounts of fees. Some fees may be paid in cash, but others are simply deducted from the value on the card. These fees may include:

– Purchase Fees that are charged when you buy a gift card. These are in addition to the money you pay in exchange for the value on the card.
– Monthly Fees or other regular charges (such as service fees, administrative fees, or maintenance fees) that are deducted from the gift card balance.

– Inactivity Fees that apply if you do not use the card within a certain time period (for example, a monthly fee that is deducted from the gift card balance if the card’s value has not been used up within 6 months after the card is purchased).

– Transaction Fees for using the card – either for all transactions, for a high number of transactions, or for certain types of transactions (for example, ATM withdrawals).

– Miscellaneous Fees for balance inquiries, replacing a lost or stolen card, or other services related to the card.

– Check to see if the gift card, or its packaging, includes information on fees or provides a toll-free number or website with full information about fees connected with the card.

• EXPIRATION DATES. Make sure you know whether there is an expiration date for the card… and what that expiration date is. If a gift card expires, you may not be able to use it, and the company that sold it to you will keep whatever money is left on the card. If there is an expiration date, you should also find out whether you can ask for the card to be reissued with a new expiration date, and what the fee would be for issuing a new card.

If this information is not stated on the gift card itself (or its packaging), check to see if there is a toll-free number or website that will provide this information.

• LOST OR STOLEN CARDS. You should also find out the rules for lost or stolen cards. Can you get a replacement card? Would there be a fee for doing so? If someone else uses the card after it is lost or stolen, would that money be credited to the replacement card?

If this information is not stated on the gift card itself (or its packaging), check to see if there is a toll-free number or website that will provide this information.

Important Reminder: Keep the receipt for the gift card purchase, and write down the card number. These may be needed if you or the person who received the card as a gift needs a replacement card.

• WHERE YOU CAN USE THE CARD. A store gift card often can be used only at the store where it was purchased (or related stores). Other gift cards, like those with a connection to the VISA® or MasterCard® systems, can be used at many locations around the world. Some gift cards can even be used to get cash at an ATM.

• TRUST. Remember that a gift card is like a loan: you are giving money to the company that holds the value of the card until you use it, and they are promising to give that money back when you ask for it. Make sure you know who is standing behind that promise, and remember that you are putting your trust in that company (and its financial stability).

• PROBLEMS AND COMPLAINTS. If your gift card is lost, or not working properly, or you have some other problem with your gift card, is there a convenient way (like a toll-free number) to make a complaint and get your problem fixed?

If this information is not stated on the gift card itself (or its packaging), check to see if there is a toll-free number or website that will provide this information.

ONE FINAL NOTE TO PURCHASERS OF GIFT CARDS: If information about fees, expiration dates, or other matters appears on a document separate from the gift card itself, make sure you pass that important information on to the recipient to protect the value of your gift!

Posted under Products

Consumers are projected to spend $25 billion on gift cards in the 2006 holiday season. The Federal Trade Commission tells consumers that gift cards, whether purchased from a retailer, a restaurant, or a financial institution, may come with strings attached.

In particular, consumers should know that some gift cards have expiration dates; others have fees that can lessen the card’s value, including activation fees, transaction fees, monthly maintenance fees, balance inquiry fees, replacement fees for lost or stolen cards, and inactivity or non-use fees. A consumer alert, “Buying, Giving, and Using Gift Cards,” offers consumer tips, including:

* Buy from sources you know and trust. Avoid buying gift cards from online auction sites; the cards may be counterfeit or may have been obtained fraudulently.

* Read the fine print before you buy. If you do not like the terms and conditions, buy elsewhere.

* When buying a card, ask about expiration dates and fees. This information may appear on the card itself, on the accompanying sleeve or envelope, or on the issuer’s Web site. If you do not see it, ask. If the information is separate from the gift card, give it to the recipient with the card to help protect the card’s value. It also is a good idea to give the recipient the original receipt to verify the card’s purchase in case it is lost or stolen.

* Check on purchase exceptions. For example, can the recipient use a store-specific gift card at either the physical store or the store’s website? Can an “all-purpose” card really be used to buy groceries or gasoline?

* Treat gift cards like cash. If your card is lost or stolen, report it to the issuer immediately. You may be out the entire amount on the card. Some issuers do not replace the cards, but others do if you pay a fee. If an issuer charges for a replacement card, you will most likely need to document the purchase and provide the ID number on the card. Most issuers have toll-free numbers to report lost or stolen cards.

Posted under Products