Hello everyone! As we head into Christmas, we are in the season of giving. Gift cards has often remained one of the most popular gift options for the “hard to buy for” – offering flexibility to a shop that someone likes whilst not feeling as impersonal as cold hard cash.
However in the present challenged retail environment a gift card can carry a few dangers when giving it as a gift – so I wanted to alert to you these and suggest that in some cases, you might want to think again.
The nature of gift cards
A gift card is essentially a pre-payment – you are giving the firm money in advance in order for them to fulfil a service to whoever you’re giving the gift card to recently. As the giver, you may feel you’re entering into a contract where the firm is expected to deliver.
In practice, the gift cards are limited by a series of terms and conditions which are skewed more in favour of the retailer than you as the customer. This will nearly always specify a list of reasonable conditions under which the retailer will revoke their promise to honour the value of gift cards.
This inevitably includes restrictions for if the firms hit serious financial trouble, such as being forced into administration (where the company financial situation is unviable to the point that they are forced to either wind down or take action like seek a buyer to stay in business) the value of the gift card will become worthless.
As a result, there’s a slight danger that if you unfortunate enough to receive a gift card for a retailer that hits problems, it becomes valueless quickly.
Why are you warning about this being a problem with gift cards this year?
Unfortunately the retail environment has been particularly bad this year given we haven’t been able to get out to physical bricks-and-mortar shops, coupled with an increased trends for us to do all our shopping online.
As I’m writing this, two big names that have been on the high street for years, Debenhams and Arcadia have both hit a point of financial collapse. Whilst these companies have been in trouble for some time, it’s sad to say they probably won’t be the last – many are struggling at the moment.
This warning about the viability of gift cards is valid every year, but unfortunately I think I think it’s particularly the case this one.
Can I protect myself from not being able to use a gift card?
There’s really only one way to protect yourself against a loss if you suspect a retailer might hit trouble – and that’s to get the gift card spent as soon as possible.
If a retailer is struggling particularly badly, it’s at least usually well publicised so keeping an eye on the news that you need to move quickly is a good defence.
Occasionally when a firm finds a new buyer they can say they will still honour gift cards in order to keep goodwill with the brand and that you will return to them as a customer. This happens less frequently than more, but it never hurts to keep hold of your card whilst they go through the process, just in case.
If you don’t want to lose them, you need to use them!
The retailers that is, not the gift cards. Given the impact this year has had on small retailers in particular, they’re in for a really difficult year. They can be slightly more expensive, but often have fantastic levels of service and are important to the local community.
It’s always your choice, but if you can – consider the benefits of using someone local rather than an online behemoth.
There can be benefits to gift cards
When used with care, there can be benefits to using a gift card where you can get an additional top up of the value of it.
I’ve written an article here about how with some retailers (including supermarkets!) that when buying a card through TopGiftCards they will offer you a little bit more than the value of the card as a bonus.