None of us intend to do this when we give a gift card to a child. The idea is to give them the freedom to choose their own gift. But gift cards come with angst as well as hidden fees and other nasty fine print handcuffs.
It shouldn’t come as any surprise that an estimated $8 billion was lost by consumers last year who let their gift cards go unused—expired, lost or ignored.
Chances are generous friends and relatives shower your children with these cards at every gift-giving opportunity. You need to step in. Follow these five steps to show your children how to take charge of what they have before they unwittingly re-gift the entire amount back to the store.
In January, a state law took effect making gift cards and gift certificates more consumer-friendly by giving recipients five years to spend them. Also under the new law, you won’t be charged fees that diminish the value of the card or certificate.
The law also requires retailers to transfer a gift card’s balance to the Illinois Treasurer’s Office as unclaimed property after the card has been expired for five years. Consumers can contact the office at www.treasurer.il.gov to reclaim the balance. Look for the treasurer’s "Cash Dash" program, which has a section dedicated to helping you reclaim expired gift certificate funds.
Visit www.illinoisattorneygeneral.gov for more detailed information on how the new amendment impacts both retail and bank issued gift cards.
A few final thoughts: If your child receives a gift card and is too young to appreciate or understand what they have, consider giving them cash in exchange for the value of the card. Cash is more concrete. With it, they can exercise all their money choices—save, spend, donate and invest—and see the money disappear.
Going forward, discourage family and friends from buying gift cards for your children, at least until the kids are old enough to keep track of the card and the value amount. Encourage cash as an alternative.
As a good friend of mine says: "Cash is always the right size and it’s always the right color."
Susan Beacham is the founder and CEO of Money Savvy Generation, a financial education company that provides innovative products and services to help parents and educators teach children the basic skills of personal finance, www.MoneySavvy Generation.com. E-mail her at [email protected]
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