Gift cards and their pitfalls – a Christmas guide

I’ve never been a great fan of gift cards, at least as a giver. I worry that the receiver might regard it as an impersonal act. But as a receiver, I’ve never actually had that reaction. And at times receiving a supermarket gift card has been a godsend when I was low on cash.

Recently, a friend I really don’t know very well offered me the use of her car for a period after mine died. It was a very generous act, so when I returned the car a couple of weeks later, I wanted to show my genuine appreciation.

Apart from barracking for the same footy team, I was not really aware of any shared interests between us. In fact, I really didn’t know of any other interests she had. As a token of appreciation, I bought her a box of chocolates. But even then, I worried there could be an allergy issue with such a gift.

So I went down the supermarket gift card path. If nothing else, I thought, it’s practical. And it was genuinely appreciated by my friend.

I no longer feel as apprehensive about this concept, but these cards can come with pitfalls. It’s worth considering these before grabbing the first one you see.

Demystifying gift cards

Historically, the biggest pitfall for those receiving a gift card has been their expiry date. I’ve always found this to be a puzzling – if not suspicious – aspect of gift cards.

Why is an expiry date necessary at all? If you receive a department store gift card for, say, $100 but do not use it for 10 years, the item you redeem it for will have a smaller value than if you’d used it straight away. In such cases, the gift card retailer ends up further ahead in terms of their bottom line.

In any case, thanks to campaigns from organisations such as CHOICE, gift cards must now be valid for at least three years. Having said that, it’s easy to pop a card in a purse or wallet and forget it for years. I’ve done it myself. These days, if I receive a gift card, I’ll add entries to my phone calendar reminding me of its existence. It’s actually nice to get an alert six months down the track and think, ‘Oh yeah! I’ve got a spare $50 to spend!’

What else is there to be wary of?

CHOICE recommends taking a few other things into consideration when purchasing gift cards. These include:

  • Balance check: it’s easier to check the balance on some cards than others. Look for one that allows you to easily check the card balance either instore, online or via a phone call. 
  • Specialty purchases: if your gift card is intended for a specific purchase, be wary of the amount on the card. Few gift cards offer the option of receiving change if the purchase price is lower than the card value. If you can’t purchase a card of equal value, try to make sure the receiver will be able to use the remaining value to redeem other items of use.
  • Restrictions: some gift cards will exclude certain items from gift cards. One I purchased recently from a leading supermarket could not be used to purchase petrol from its associated service stations.

There can be other, rarer pitfalls such as fees and charges. It’s best to ask the retailer about any conditions when purchasing your gift cards.

A genuine Christmas option

With Christmas approaching, gift cards might not be your first option when shopping, but they can still be useful. And most recipients will be grateful to receive such a gift. Anyone who isn’t can, in my view, be justifiably referred to as a bit of a grinch.

Are you a regular buyer or user of gift cards? Are there ones that you recommend or specifically recommend against purchasing? Let us know via the comments section below.

Also read: Why you should do your Christmas shopping now

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Written by Andrew Gigacz

Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


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  1. There is another hidden problem with gift cards. I used a prepaid Visa card to make a purchase from an online lighting store. This store does not have a bricks and mortar store but have a very good return policy. When returning goods you have to fill in an application form, have it ‘authorised’ then return the goods for a refund less a restocking fee. All well and good, until you pay with a prepaid Visa gift card. Then suddenly there was no refund and only a store credit. In my case, they tried to fob me off with a store credit valid only for 3 months until I pointed out that was against the law since the minimum validity in NSW is 3 years! Then they tried to charge me a fee for paying through PayPal – I didn’t I used a prepaid Visa card. They refused the refund on the grounds they could not just reverse the payment back to the gift card. The issue is two-fold for me: firstly this was a store I had never used before (it’s a specialty lighting store with only an online presence and a warehouse for collections only) and am unlikely to need to use in the future, and second the blatantly unfair treatment a gift card holder receives. As it is now, for me this company is holding over $200 of MY money that I am unlikely to be able to recover. So my message is think very carefully about how and where to use a prepaid Visa gift card (and probably Mastercards too) and be very careful about giving one for the same reasons.

  2. I am an avid giver of gift cards and also love the ones that I/we receive.
    Sure, the receiver knows how much you have paid for their present but at least they can purchase whatever they want, especially teenager and younger adults – and when you don’t see them regularly.

  3. I do a significant number of on-line surveys. The payment is via gift cards. Some survey groups are very limited in which gift cards they provide. Eftpos cards are useful as they can be used in many retail outlets.
    I have a dear friend who usually has everything in and around her house that she needs. In which case, the gift that she appreciates as there’s always something there that she can use around her garden, is from a major national hardware and garden supplies store.
    My granddaughters who have either left their teen years or are close to doing so can appreciate a gift card from one major on-line music seller. I don’t have to know their music tastes nor risk getting it wrong.
    I’d imagine when income is given in the form of Gift Cards, the ATO will not be aware of it and will not be reaching out for their share of it.

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