Gift Card Etiquette
Gift Card Etiquette - Julia Kagan is a financial/consumer journalist and former editor-in-chief, financial, of Investopedia. A gift card is a prepaid debit card with real money available to be used for various purchases. Store gift cards are designed to be used at specific merchants or retailers, while old-fashioned prepaid gift cards are not associated with a merchant and can also be used to withdraw money at teller machines (ATMs).
Source: www.debt.com
Gift Card Etiquette
Gift cards are a type of prepaid debit card that is loaded with cash for future use. There are generally two types of gift cards: Open Loop and Closed Loop. Both types are commonly used online and in person. Most gift cards have a minimum and maximum initial loading amount.
For example, there can be a minimum amount of $10 and a maximum amount of $500. In some cases, gift cards can be used to pay for part of the purchase, with cash, debit or credit to balance the cost. As a way to reduce the risk of loss, many gift cards can also be registered online - a process that allows the remaining balance to be tracked and frozen if the card is lost.
In this way, some gift cards are safer than cash. Depending on the current card, the reload fee may apply to increase the amount each time. Covered gift cards are usually sold by retailers, allowing the cardholder to purchase anything from a specified retailer. Closed-loop cards can usually only be used by a merchant, either in-store or on their website.
What Is A Gift Card?
However, if a company has several different vendors, it can issue gift cards that can be used at any of them. Gap Inc. (GPS) is one such organization: Its cards are often redeemable at any of its affiliated stores, including Gap, Banana Republic, Old Navy, and Athleta.
Source: img.money.com
Closed-loop gift cards usually do not require a usage fee. Also, these gift cards do not include the logo of the processor (the financial services company that actually handles the transaction mechanics), although they do include the merchant's logo; In a sense, they act like advertisements in a store.
Closed-loop gift cards are usually non-reloadable, so if the balance runs out, they have no further use. Also, funds on a locked-in gift card may have a specific expiration date, requiring the user to use the card within a specified time. Closed-loop cards are popular gifts for wedding and baby registries.
Many retailers also offer gift cards as a bonus to people who sign up for their registry. The global market for gift cards is expected to reach a compound annual growth rate of more than 12% through 2031, according to Persistence Market Research. Open-loop gift cards offer a cash equivalent—or more specifically, a credit or debit card that can be used at any retailer where the card is accepted, as well as online.
How A Gift Card Works
Many of the major charge or credit card issuers/processors, such as American Express, Visa, Discover, and MasterCard, offer open-loop gift cards. These cards display a payment symbol and can be used to make all kinds of electronic payments anywhere. Open-loop gift cards also have the ability to function like a standard prepaid card.
These cards are usually reloadable, allowing the user to add personal funds as well. Open-loop cards sometimes require an opening fee of up to $5, which must be paid when the card is purchased. Gift cards started in 1994, according to Mageplaza, an extension marketplace for the open source commerce platform Magento.
Source: i.pinimg.com
Increasingly, retailers are choosing to offer digital gift cards to consumers as an incentive to encourage spending. High-end stores, such as Saks Fifth Avenue and Bergdorf Goodman, send bonus gift cards to loyalty program members (those who spend a certain amount during a promotion or over a certain period).
However, 75% of gift card redemption volume is still in physical cards vs. 25% of gift cards are digital, according to the National Gift Card (NGC) industry survey. Gift cards are increasingly being targeted by fraudsters. According to the Federal Trade Commission (FTC), consumers reported gift card losses of $148 million in the first nine months of 2021.
Closed-Loop Gift Cards
These scams mostly revolved around fraudsters asking customers to buy gift cards as a form of payment. The customer gives the scammer the gift card number based on the assumption that they are making a legitimate payment. The criminal then spends the money. Another scam involves the misuse of physical cards in the store.
Fraudsters manipulate the cards to get the card number. When a customer buys a card and loads money onto it, fraudsters can steal that money by using the card to make purchases. Gift cards are very popular among fraudsters, accounting for $35 million in reported losses in 2021. Avoid buying gift cards in a store that looks damaged or otherwise tampered with, and only use gift cards to make payments to people you
know and trust. A gift card is a prepaid card that can be used to make purchases and make other types of financial transactions. Gift cards can be open loop or closed loop, which can determine where and how the card can be used. Yes, it is possible to use a gift card to withdraw money at an ATM if the card allows it.
Source: pennypinchinmom.com
In general, this is only an option with open-loop cards that are not associated with a store or brand. Depending on the card, it is possible that the gift card may expire if the amount loaded on it is not used within the specified time.
Open-Loop Gift Cards
You may also pay a fee to open a new gift card or reload money on an existing gift card. Some prepaid gift cards may also charge monthly or dormant account fees. Gift cards can be useful for shopping online or in stores. You can buy them to give as gifts to friends and family, or you may get gift cards as a reward when you shop with another retailer.
Understanding how gift cards work and where to use them is important to avoid fees or the risk of a gift card expiring. At the same time, it's important to consider gift cards—especially during the holiday season, when many people buy and use them to make purchases.
Consumer Financial Protection Bureau. "§ 1005.20 Requirements for gift cards and gift cards." Accessed December 12, 2021. Consumer Financial Protection Bureau. "Choose the right card for your situation." Through December 12, 2021. National gift card. "Even in the digital age, 3 out of 4 loyalty points are redeemed for plastic gift cards."
Accessed December 12, 2021. Federal Trade Commission. "FTC Data Shows Big Increase in Gift Cards as Scam Payment Method." Accessed December 12, 2021. How do the less written rules work during the holidays for someone you don't know. There are rules of etiquette for giving gifts, but everyone's interpretation of these unwritten rules is different.
wedding gift message, gift giving etiquette in america, wedding card gift etiquette, gift giving and receiving etiquette, etiquette gift giving, proper etiquette for receiving gifts, gift giving etiquette usa, etiquette rules for gift giving