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Holiday gift card: A gift with strings attached
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Horne says that open-system cards like American Express and Visa can be used in more than one retail location, so many of them charge fees in order to make a profit.

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"If you purchase an American Express card and the recipient uses it to buy a pair of jeans at Macy's, $96 will go to the retailer, where only $4 will go to American Express. I don't see how an open-system gift card supplier can make money without the fees.

"In comparison, closed-system cards are used specifically in that store, and, therefore, the total amount of the gift card is completely returned to that merchant, thus oftentimes eliminating the necessity for fees and, in most cases, expiration dates."

Choosing the right card wisely
Despite some of the snags that come with gift cards, six out of 10 Americans will purchase gift cards this year and spend, on average, $339. Those numbers, calculated from a study by ValueLink, are impressive when you consider that just a couple of years ago gift cards were considered the last-minute or lazy man's gift.

If you want the most boom for your buck, experts agree that closed-system cards are a better choice, because you are providing the receiver with a gift from a particular store you know they like. Closed-system cards are also not that far away from cash.

"You don't see many of the fees or expiration dates, and it's overall better for the customer because they are getting to spend the full value of the card," says Horne.

The sweep of gift cards in the last decade has shown that retailers are listening to consumers who demand the product but don't want to deal with the fees and expiration dates. That means that retailers have been and will continue to absorb some of the costs that come with keeping the accounts opened longer than a year.

"Gift cards are a fundamental part of doing business now," says Larsen. Retailers want to accommodate their customers while keeping the money within their store.

Scott Krugman, vice president of industry public relations for the National Retail Federation, says gift card givers and recipients are becoming more aware of expiration dates, fees for nonuse and other hidden fees that will affect the value and usage of the gift cards. Experts encourage recipients to use the cards quickly. According to UnclaimedAssets.com, from 3 percent to 5 percent of gift cards, a total of $2.75 billion worth or more, are never redeemed.

"Every gift card indicates stipulations on the back of most cards, so review it wisely before purchase to assure that you are conveying positive information to the recipient because you want them to get what they want," says Horne.

Personalizing gift cards
Consumers know what they want, and now the trend is to customize the gift card by personalizing the cards to the recipient's particular interests and wants. According to an American Express survey, more than half of shoppers, 57 percent, agree that gift cards are a cool gift.

According to Larsen, gift cards are being designed and marketed with more thoughtfulness in mind.

Next: "Gift cards will grow beyond paper and plastic."
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