5 reasons to be wary of gift cards and gift vouchersGift card sales up 15.6% but beware the pitfalls

26 April 2011

Gift card

Prepaid cards, postal orders, cheques and bank transfers are all flexible alternatives to gift cards and gift vouchers

According to the UK Gift Card & Voucher Association (UKGCVA), the UK's gift card and voucher market has experienced its highest ever year-on-year increase in sales, with a boost of 15.6% over the previous year.

But consumers need to be careful when buying gift vouchers and cards for family and friends – most come with restrictions that could mean you lose all the money on the card.

1. No cover for lost or stolen cards

Many retailers, including Marks & Spencer, won’t refund your money if you lose a gift card. Dixons and PC World, for example, state on their website that ‘No liability is accepted for lost stolen or damaged cards’, even though a single card can hold up to £4,999.99.

2. No protection under the Financial Services Compensation Scheme (FSCS)

Most gift cards and vouchers are not covered under the FSCS if the retailer goes bust. You may get a small percentage of your voucher value back through the liquidators (as when Zavvi went under), but this could be pennies in the pound, if you get anything back at all.

3. Many gift cards can’t be used online

Many retailers, including Currys, IKEA and Argos won’t let you shop online using a gift card. As the best deals are often available only online, paying by gift card in-store may cost you more.

4. Expiry dates

Always check how long a gift card lasts. For example, while gift cards from IKEA and BHS have no expiry date at all, others, including those from the Westfield Shopping Centre, are valid for as little as 12 months from the date of purchase. If you don’t use your balance by the expiry date, you’ll lose your money.

5. Be wary when buying gift cards and vouchers with a credit card

be careful when you pay for gift vouchers using a credit card - Which? members have reported to us that some retailers log this on their system as a purchase of cash. The purchase is then treated as a cash withdrawal on your credit card statement. Not only will you be paying interest of around 30% from the moment you buy the vouchers, you’ll usually also lose your interest-free period (usually around 50 days) on all purchases in the following month due to trail interest on your account. Either check with the retailer beforehand, or use a debit card instead.

For more details on gift cards, as well as alternatives such as prepaid cards, read the Which? guide to Gift cards.

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