Considering a gift card purchase over the holidays? Buy directly from a retailer if you want to save on fees.

Bankrate's third annual gift card survey reveals that gift cards purchased directly from retailers carry no fees, while cards from the big four credit card issuers and major shopping mall operators come with fees and expiration dates.

Bankrate surveyed American Express, Discover, MasterCard and Visa, along with top nationwide retailers and the six largest shopping mall operators on their plastic gift cards and electronic cards. Of the 31 issuers of gift cards surveyed, only 12 offer both plastic and electronic cards.

All about the crowd pleasers: • Satisfaction with cards is high. • Read the fine print. • More niches served. • What fees are acceptable? • E-cards not widely available. • Check state laws about gift cards.

Gift card purchases are projected to reach an all-time high this holiday season, according to Archstone Consulting in Stamford, Conn. Its September survey predicted total sales of $35 billion this year, an increase of 25 percent over last year's gift card sales. A study by Comdata Stored Value Solutions projected that in the 2007 holiday season, the average gift card buyer will spend $203 on cards, a $17 increase from 2006.

Teens have embraced gift cards faster than any other segment. According to the Teen Gift Card Survey commissioned by Comdata, 98 percent of teens between the ages of 14 and 19 have either bought or received a gift card.

For all consumers, the average amount of each gift card was $53, up from $46 the previous year. So don't look for gift card growth to slow down anytime soon.

Why so popular?
The primary driver for the growth of gift cards is that a gift card allows a recipient to choose the gift they really want.

"The desire of the gift giver is to help the recipient," says Tim Sloane, director of the Debit Advisory Service of Mercator Advisory Group in Waltham, Mass. "They think, 'When I give someone the gift card, I hope they'll use it on something they really want.' If they decide to buy something that they couldn't have and now the gift card makes it attainable, that's good too. As a recipient, I would remember what it was that helped me get that gift. Satisfaction with gift cards is great."

Dan Horne, a marketing professor at Providence College and an expert on the gift card market concurs: "Consumers look at a $50 gift card and think, 'I can get a $75 item and it only costs me $25.' Recipients are getting cool things for a cheap price. And the giver thinks, 'I gave you the means to buy that thing.' The perceived value is very strong."