Healthy finances
At her last birthday party, my daughter Allison, now 16, received almost nothing but gift cards. She and I spent untold hours in the malls trying to redeem these cards. It was agonizing to watch her try to shop at stores she had never shopped at before or try to find something she wanted that matched the value on the card so she did not have to add her own cash to the purchase.
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 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.
1 Ask your kids to gather all the gift cards they have and bring them to the table. Work together to create a written log for each child’s gift cards with the name of the card, the value of the card, the card number and the expiration date. 2 Separate the cards into retail gift cards and bank gift cards and then read the fine print on the back of each. There can be different rules of redemption for each card. Bank cards can be the trickiest to keep track of. 3 Look at the back of each card and add to your log the replacement card rules if the card is lost or stolen. Is there a fee? Do you need the original card number and original receipt? Also write down any other fees, such as monthly fees that begin to get charged after a certain period of non-use. These fees can quickly erode the value of the card and some are retroactive. 4 Get some white correction tape—sold at any office supply store—and put a strip of it somewhere on the card. Every time the card is used, show your child how to mark the purchase on the tape. This will help everyone keep their eye on the value remaining on the gift card. 5 Learn the Illinois law on gift card redemptions. Attorney General Lisa Madigan suggests that you spend more time on the fine print on gift cards."We have worked to create protections from hidden fees and expiration dates that drain the value of gift cards before consumers have the chance to redeem them,” Madigan says."But even with legal protections, a consumer’s No. 1 protection… is to read the fine print before purchasing gift cards.”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 susan@MSGEN.com.
