New Rules for Christmas Gift Cards 2010

Gift cards have added a whole new competitive element for Christmas retailers and have introduced interesting new dilemmas for Christmas shoppers. As a shopping trend there is no doubt that gift cards have grown in popularity - more than $80 billion worth of them were sold in 2009. But as a category gift cards have matured and, thanks to legislation taking effect before the holiday shopping season 2010, the rules have changed a little bit.

As you will learn, the benefits to the buyer of gift cards could not come at a better time. In a down economy, gift cards have steadily dropped in average price - from a high of better than $58 in 2008 to an average high value of just over $44 today.

The economy has much to do with that. People are buying gifts on a budget and gift cards make it simple to stay on strict targets - and are cheaper and easier to send than conventional gifts. The average value of a gift card has also been affected by the broad variety of gift cards now available - everyone from 7-Eleven to the National Park Service now offers a gift card.

But shoppers' perceptions about gift cards likely have a lot to do with that decline as well. At a sensitive giving time such as Christmas many wonder about the appropriateness of giving gift cards at all, viewing them as impersonal and, in some cases, thoughtless giving efforts. At least that is how folks felt in 2007 when a national survey revealed that 46 percent of gift card recipients were not appreciative of the gift cards they received.

In a new study released recently it appears gift cards are benefitting from economic difficulties in one respect: 77 percent of recipients now say they love gift cards if they help meet a need such as groceries, instead of a luxurious want, such as lotions, jewelry or books. The 2010 My Merry Christmas.com survey of Christmas trends and opinions reveals that Christmas is more meaningful if giving focuses on wants more than needs by better than 82 percent of respondents, a clear indicator of the economic times.

Over the years gift cards have also been problematic for both givers and receivers. Givers have been limited by pre-set amounts established by merchants. Receivers have been penalized for not immediately redeeming gift cards of their full value. Legislation was passed in 2010 that should clear up some of those issues. Here is a brief list of what you should know about new gift card rules in effect for cards purchased after August 2010:

1. Gift cards are good for a minimum of 5-years by law. No more expiration dates.
2. If a gift card lies dormant no fees can be charged for maintenance or storage for at least a year.
3. If a gift card lies dormant for MORE than a year, significant fees can be charged for maintaining a balance. Buyer - and receiver -- beware.
4. Lost or stolen gift cards, by law, must be replaced upon demand when proof of purchase is satisfied matched with unredeemed value.
5. Though most name brand retailers don't charge a premium for a gift card, some do and can, if properly disclosed, according to the CARD act passed in 2010.
6. If a company goes bankrupt, like Sharper Image did a few years back, gift cards from them will be absolutely worthless. No protection is offered from new legislation.

Only time will tell how gift cards will mature as a gift giving category. No doubt future economic shifts and retailer promotions will affect how gift cards are used and perceived.