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Home » Business And Finance Articles » Gift Cards The Advantages And Disadvantages

Gift Cards: The Advantages and Disadvantages

Everyone loves receiving and giving gift cards for special occasions. They reduce the stress of worrying if the recipient will like those jeans or shirt you bought them. They eliminate the fake smile and the "I can always use a new pair of jeans" routine from the person getting the gift. However, beware of the risks and hidden cost while using your gift card.

Consumer Advantages

Every year, gift cards are increasing in popularity. Generally, there are three different cards: store-specific gift cards, restaurant gift cards and general-purpose gift cards. Store-specific gift cards are meant to be used at the particular store and usually come with less hidden fees. Some stores like Old Navy and Banana Republic have became partners and allow their customers to use the gift card at either store. Restaurant gift cards are very similar to store-specific gift cards. They allow you to go and enjoy a nice dinner as a gift. Just make sure you tip the server the same percentage as you would if you were paying the total bill. General-purpose gift cards give the consumer a broader range on where to use the card. These types of cards are typically Visa, MasterCard or American Express and can be used anywhere those major credit cards are accepted. The flexibility is the main benefit of using the general-purpose card. You can fill up your gas tank, go out to eat, buy concert tickets or what ever else you want to do with it.

Consumer Disadvantages

Many general purpose cards come loaded with fees. According to The Lowdown on Gift Cards article on Bankrate.com, some gift-card programs will issue you another card if your card expires. These replacement cards will cost you from $5.95 to $10. If you order the card online or by phone you will be charged a $4.95 to $8.95 shipping and handling fee and a $3.95 to $11.95 service fee. Some gift cards will charge you a monthly maintenance fee if you still have a balance on your card after six months or a year. If you still have a balance after this period of time, a $2 to $3 monthly fee kicks in.

If your gift card is lost or stolen, good luck! Some retailers will not replace a missing gift card. Other retailers such as Macy's and Bloomingdales are more easygoing and will issue you a new card if you can provide a receipt showing your most recent purchase. Some general-purpose cards will cancel the missing card and will re-issue a new one for a $5.95 to $10 fee.

So make sure you keep your card in a safe place, use it before it expires and buy it directly from the merchandiser and you will avoid most of these fees.

Retailers

According to the Retailers Just Love Them article on CBC News Online, the sales of gift cards have exploded from $1 billion in 1995 to an expected $70 billion in 2006 in the United States. As of 2004, 68 percent of all major retailers offer some sort of a gift card. The number is probably even greater now that it is 2006. Coffee giant, Starbucks, has estimated that 10 percent of all their sales come from gift cards.

Another reason retailers love gift cards is consumers will pay less attention to sales and they tend to spend more than what they have on the card. Retailers notice that consumers will spend the whole amount on the card and have a small balance of $2 or $3 left on it. Chances are, shoppers will never use the card again and this works to the retailer's advantage.

One more advantage to retailers is instead of having just the holiday rush and then being prepared for holiday returns, they actually get a double rush. Since consumers give gift cards as holiday presents, the gift card holder will usually rush straight to the mall after the holidays to spend their cards. This results in a major cut-down in returned merchandise.

There are a few disadvantages for retailers. Gift cards can cost the retailer for 50 cents to $3 per card, depending on how many are ordered. There are also implementation costs of up to $50,000. Implementation costs cover all start up fees related to producing and tracking of gift cards.

Gift Card Exchanging

Recently, Internet businesses have created web sites allowing people to sell or swap unwanted gift cards. EBay got involved in this idea and now has more than 7,500 gift cards listed for sale or auction. This can be a good idea if you receive a gift card to a particular store and you do not like anything in that store. You can exchange these cards on these sites for other cards or even cash. Sites such as SwapAGift.com and CardAvenue.com are good sites that offer this service. On CardAvenue.com, you can even buy gift cards at a discounted rate. For example, you may be able to buy a $25 Office Depot card for $17; that is another way of saving.

Copyright 2006 Debt Management Credit Counseling Corp.

And here is another random article you might be interested in...

What Is A Virtual Assistant?

Virtual assistants are a fairly new concept in the business world. Virtual assistants provide administrative support for their clients without having to be located in the client's office.

A virtual assistant's job can include any number of administrative and personal support tasks including bookkeeping, scheduling, data entry, and research, just to name a few. A virtual assistant performs any number of tasks based on the needs of the client. Clients come from numerous sectors of the business community. A virtual assistant can work for small business owners, individuals needing assistance with personal projects, or large corporations.

Any business can benefit from the services of a virtual assistant and the demand for them grows each day.

A virtual assistant works from his/her own office and can help clients with administrative tasks, which can include desktop publishing, web site maintenance, search engine placement, and word processing. Each virtual assistant will have their own areas of expertise and will use these skills to benefit clients.

Growing technology and the wide spread use of the internet have made virtual assistants a very practical means for employers to accomplish routine or specialized tasks without having to hire on-site employees. A virtual assistant can perform tasks such as event planning, making travel arrangements, scheduling for corporate conventions, and any other job that is within their range of skills.

Virtual assistants can be paid by the hour or per job and may even receive a monthly retainer from clients who require large amounts of work. Payment can be made online through credit cards or Paypal, and some virtual assistants may allow regular clients to pay with a company check that is sent through the mail.

Each virtual assistant will decide what tasks they are comfortable in taking on and will make arrangements for payment in the manner they feel is appropriate for that particular client. The demand for virtual assistants increases constantly as business owners have seen the convenience and range of services that are provided. A virtual assistant can take on as many clients as they can reasonably accommodate. An excellent reputation and quality work will no doubt lead to many new clients.

Virtual assistants can either work independently or as part of a specialty virtual assistant organization. Virtual assistants who provide consistent, top quality work for their clients can expect to have no shortage of work and the pay is quite good considering the majority of jobs can be completed online in the virtual assistant's own home. Becoming a virtual assistant can be a wonderful career move for those who are motivated professionals.

A virtual assistant can even provide services such as wedding planning, invitations, hotel reservations, and EBay assistant. The possibilities are basically endless depending on your comfort level and particular skills. A virtual assistant can be an economical addition to any size business and a great career for talented, self-disciplined individuals.