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What to Know Before Giving Holiday Gift Cards

8 tips to save money and avoid the 'gotchas'

Once considered impersonal, gift cards today are perceived by millions of consumers as practical and convenient holiday gifts. In fact, they’re topping holiday wish lists for the eighth year in a row. According to the National Retail Federation, the average person buying gift cards will spend $172.74, for a total of $31 billion.

Though buying a gift card is easy, it's important to be as thoughtful with your purchase as you are with other items. Here are eight tips:

1. Redeem rewards for free gift cards. Most credit cards let users redeem their rewards for gift cards, and some offer deals on specific cards. This is a great option for gift giving since it won't cost you anything extra.

(MORE: 3 Ways to Give Kids Money for the Holidays)

2. Get gift cards for a discount. There's no sense in paying full price for a gift card when you can easily save 5 to 30 percent off the face value.
Shop for cards through GiftCardGranny.com and get 11 percent off cards to Starbucks; 26 percent off cards for Ann Taylor and 11 percent off cards for Home Depot.

You can also buy gift cards in bulk from Costco and Sam's Club and receive a discount. For example, Sam's Club is offering a 3-pack of $25 Outback Steakhouse gift cards plus a free $10 gift card for the restaurant for $71.98.

3. Watch for promotional "gotchas." Some gift cards that come free with select purchases are not true gift cards and might have expiration dates and usage restrictions.

For example, Staples is currently offering a free $5 Promo card with purchase of $25 in eGift cards. However, that Promo card is only valid through January 31 and must be used via Google Wallet for redemption.

(MORE: Tis the Season to Be Scammed)

The free gift cards currently available with select purchases from Target, on the other hand, appear to be the real deal.

Ultimately, it's always good to read the fine print before using or re-gifting these cards.

4. Some gift cards still come with fees. The CARD Act of 2009 did away with pesky fees and rapid expiration dates for most gift cards, but there's an important exception. Bank gift cards like those offered by VISA, MasterCard and American Express still carry fees of up to $4.95.

When you're not sure which gift card to give, these bank cards may seem like a good choice, but that extra fee is an unnecessary expense when cash is just as useful.

5. Daily deals can be gift cards. Giving the gift of an experience is increasingly attractive in our culture of mass consumerism. Daily deals, a gift card of sorts, are a great method of offering someone something like a day at the spa or an evening at the newest restaurant. Just review the vouchers carefully before purchase for expiration dates and restrictions.

(MORE: Who Can You Trust On the Internet?)

6. Virtual gift cards make the perfect present in a pinch. Whether you were surprised by an unexpected gift from a neighbor or you missed the shipping deadline to get that package to a loved one across the country, virtual gift cards can come to your rescue.

Most retailers offer electronic gift cards you can online and send directly to the recipient's inbox. What’s more, you can often print them out from your home computer.

Keep in mind: you’re not limited to department stores or big box retailers. Online gift card options are available for movie theaters, spas, hotels and even airlines.

7. Get creative with your gift card packaging. For instance, you could wrap a spa gift card in a gift basket filled with a few at-home spa products like bubble bath and body lotion. Or you could pair a gift card to a favorite coffee shop with a festive mug and peppermint stir sticks. Putting effort into your presentation will make your gift card even more well-received.

8. Gift cards are not always the best gift. Sure, they’re the ultimate "I don't know what else to buy" gift, but that doesn’t mean they’re a good idea. If you don't know the recipient's shopping preferences or don’t know if the particular store or restaurant is located in their area, it's probably best to give something else, like a gift basket of gourmet food or a subscription to a favorite magazine.

Andrea Woroch is a nationally-recognized shopping expert for Kinoli, an internet marketing company helping consumers save money online. For more of her tips, visit AndreaWoroch.com or follow her on Twitter @AndreaWoroch.

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