Reusable Gift Cards are credit card sized cards which may be purchased at a retailer. The advantages of the cards include ease of use and storage. Cards that are reloadable have multiple use opportunities, but not all cards are reloadable. Some retailers might give a special discount for using their location's gift card either in addition to or in lieu of other discounts; however, this is rare. The retailer usually charges tax at time of redemption, not at initial purchase of the card, so that the person that receives the "gift card" still has to pay tax at the time of check-out. Very few retailers waive the tax altogether.
How They Work
The card is purchased at the retailer. Gift cards issued by the actual store are usually free of any fees. This value is now stored in an account maintained by the retailer that can be accessed for purchases exclusively at that retailer.
There are also pre-paid debit cards that have a fee of around $4.95 that are issued by Visa, Mastercard, Discover, or American Express. These types of cards come in preset amounts such as $25, $50, or $100. These types of pre-paid debit cards can be used anywhere Visa, Mastercard, or American Express are accepted. They are good until their value runs out.
California law provides some protections for consumers (see this FAQ); for example, service fees for non-use can only be charged in very special circumstances.
Advantages
- No more losing or accidentally destroying/washing those bulky and fragile paper gift certificates.
- if the electronic gift card is ever lost or stolen, some retailers (but not all) have a record of the transaction and will issue a refund or a new card for the amount remaining. Target will issue refunds with a receipt. Starbucks will issue a new card if you register your card online.
- Reusable cards can be filled with more money and can prevent the frustration and worry that can be associated with carrying cold, hard cash.
- Special discounts for using them at some stores.
- Traceable: Some stores such as Starbucks have websites where you can view previous purchases and view your balance. Prepaid debit cards such as American Express also have a website where you can view your previous purchases and check your balance.
- Some people think that gift cards are more personal than cash or more fun.
Disadvantages
- They are plastic and not very environmentally friendly. (Target, Borders, Starbucks, etc. will either recycle or dispose of your cards when empty)
- Tend to reduce fair competition (if you have the card, why go to the competitor... also known as Loyalty Guilt).
- If damaged or made to be unreadable, potential of losing the credit still remaining on the card (unless you can show a receipt proving how much is available on it or if you register your card online such as with Starbucks). Gift cards should be treated as cash.
- Some locations have either a preset value or minimum value amount requirements (but Trader Joe's and Target cards can be issued in almost any amount that you choose)
- If the giftee doesn't want anything from the vendor you picked, then the money is unusable for them or they have to find some other way to get their present (re-gift the card, sell the card, etc). Cash is easier.
- The gift recipient may find themselves poring over the legal details in the FAQ linked to above. Cash is simpler.
Local Retailers who use Gift Cards
- Costco - No fee. Available in preset amounts ranging from $25-$1000. Card allows non-members access to Costco.
- Drom's Comics and Cards- No fee, no minimum requirement or preset value.
- Gap - No purchase fee, tax at time of check out, not time of sale... Preset value.
- Starbucks - No fee. No preset value. Many Perks:
- If you register your card online you can get a new card if you lose your old card. Earn points towards discounts on drink prices. Free Drink Coupon mailed to you on your birthday.
- Starbuck's also has a wide variety of designs for their gift cards, creating a collector's market for them.
- Target - No fee. No preset value.
- Trader Joe's - No fee. No preset value.
