Like fruitcake, wreaths and candy canes, gift cards have become a permanent fixture of the holiday gift-giving tradition.
A recent survey by the National Retail Federation illustrated the trend reporting that consumers will spend more money than ever on the little plastic cards — nearly $25 billion, an increase over 2005 when sales reached about $18 billion.
“They’re huge,” said Jim Benson, director of sales promotion for Dillard’s department stores. “Everybody loves getting a gift card.”
Experts say some of the reasons behind their popularity among businesses are that they drive up sales, increase purchases on items with higher profit margins, cut down on returns, occupy little shelf space and they promote the company’s branding. “It’s just a very simple form of transaction,” Benson said.
Benson said he couldn’t say how many gift cards his company expected to sell this season, but said it would be “substantial.”
Jay McIntosh, director of retail and consumer products for Ernst & Young, said the trend was noticeable about three years ago when retailers began offering discounts on purchases made with gift cards and other special perks.
“The one I see the most often now is if you spend a certain amount of money, you’ll get a gift card,” he said.
Kathy Grannis, a National Retail Federation spokeswoman, said the cards have a growing appeal among customers, too.
About 53 percent of consumers polled by the organization said they wanted to get a gift card for the holidays. That’s up from 48 percent in 2003.
She said its hard to know what started the snowball-like growth of card sales, whether it was companies pushing them in stores or increasing demand from consumers.
“A lot of people kind of think of it as the chicken and the egg argument,” she said. “But if gift cards weren’t being bought ... obviously we wouldn’t see the push for them like we do now.”
McIntosh said although card sales have continued to climb over the years, there’s still a lot of room for growth before leveling off.
Benson disagreed. He said despite their continuing appeal, retailers have been offering the cards for about a decade and that sales are going to cool. “I think it’s starting to stabilize he said. “The popularity has hit its peak.”
Grannis compared the gift card-giving frenzy of recent years to other fads. “All things come in trends,” she said.
“It’s really just a matter of whether retailers ... continue to offer attractive gift cards and if they promote them.”
Dangers include fine print, thieves
Terri Whited didn’t buy any gift cards during the holidays last year.
This year, however, she spent $500 on the little plastic cards for family members.
“It’s just easier,” she said.
That’s especially so when shopping for the teenagers in her family, she said.
“If I buy them something, they’re just going to take it back anyway.”
Whited is part of a growing trend among consumers opting for the cards when shopping for other people during the holidays.
The National Retail Federation said 80 percent of polled consumers planned to buy at least one gift card for a loved one this year. That’s up from 76 percent last year.
With that growing trend has come a rising number of warnings from experts about the pitfalls and dangers shoppers should avoid before forking out a lot of money.
“Gift cards should be treated exactly like money,” said Lt. Paul Chagolla, a spokesman with the Maricopa County Sheriff’s Offi ce. “They should be accounted for just as you would your checkbook or your own credit cards.”
The sheriff’s offi ce is warning the public of a growing number of heisted gift card account numbers.
Chagolla said perpetrators will copy the numbers, wait until the card is activated by another person, and then use the account to make purchases online.
The Better Business Bureau of Central/Northern Arizona recently issued a consumer advisory on the same scam.
“That’s something new. We didn’t see that last year,” spokeswoman Felicia Overton said.
She said thieves are con- stantly altering and improving upon their strategies to fleece shoppers, and people need to remain aware to protect themselves.
But consumers have more to worry about than criminal ne’er-do-wells.Customers who don’t read the fine print on the cards may be unaware of things like fees and expiration dates.
The Office of the Comptroller of the Currency, a federal agency that oversees gift cards issued by banks, said fees can be assessed for inactivity on a card, numerous purchases made on an account, and carrying a balance from month to month.
Agency spokesman Kevin Mukri said shoppers should become familiar with the company’s terms.“These are contractual agreements,” he said. “You’re buying a $50 gift card, but you’re accepting the terms of that contract, whatever it is.”
Overton said customers can avoid getting stuck with unexpected charges by reading the terms before leaving the store.“Just pay attention to what it actually says on the back of the card,” she said.