Gift Cards Are a Hot Item This Year. Watch Out for the Fees.
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What is the main topic discussed in this episode?
Here's your money briefing for Thursday, December 24th. I'm J.R. Whalen for The Wall Street Journal. It may be beginning to look a lot like Christmas, but not in the nation's stores or shopping malls, where the pandemic has kept the usual throngs of shoppers at home. But it's not all bad news for retailers. Homebound shoppers have made gift cards, typically a popular holiday gift idea, an even hotter item in 2020.
Why are gift-card sales booming during the 2020 holiday season?
People I talked to said that they, in past years, didn't really give gift cards because they felt like they were too impersonal. But this year, they feel like it's sort of a last resort that they, you know, this late in the season, if they haven't already bought their gift or sent their gift, they feel like if they wanted to arrive by Christmas, you know, especially an electronic gift card is the way to go.
coming up, our retail reporter Suzanne Kappner will have more on what's driving gift card sales higher this year, plus important reminders on gift card fees and expiration dates. That's after the break.
In 2020, gift wrapping is out and gifts arriving in an envelope or an email are in. The pandemic keeping holiday shoppers at home is creating a boom in gift card sales. But recipients should watch out for expiration dates and those annoying fees that can eat away at the card's balance. For more, let's bring in our retail reporter, Suzanne Kappner.
How much have gift-card sales increased compared with last year?
Suzanne, thanks for being with us.
Thanks for having me.
So gift cards are usually a popular item to give at the holidays, but even more so this year. Just how much have sales increased?
Well, they're up considerably in, you know, the first week of December alone. They're almost double what they were the same period a year ago. And that's because in part people are nervous about going to stores because of the pandemic. And they're also worried about buying online gifts because of the shipping delays.
All these forces coming together could be really good news for retailers.
Yeah, and gift cards, like you said, they've traditionally been popular, but there have been, you know, people I talked to said that they, in past years, didn't really give gift cards because they felt like they were too impersonal.
Why are shoppers choosing e-gift cards instead of physical gifts?
But this year, they feel like it's sort of a last resort that they, you know, this late in the season, if they haven't already bought their gift or sent their gift, they feel like if they wanted to arrive by Christmas, you know, especially an electronic gift card is the way to go. Well, some shoppers I talked to said they're trying to buy gift cards from local merchants as a way to support them during this difficult time.
But as popular as gift cards are, people often don't rush out to use them. You know, a lot of us have gift cards sitting around in our wallets or the kitchen drawer, and we often forget about them. Are expiration dates a concern?
Well, there are two types of gift cards. You know, one are branded by the store merchants like a Macy's or a Best Buy, and those tend not to have expiration dates. The other ones that are branded by like a card services company like a Master or Visa card, they don't expire either, but they do have fees that can eat into the balance.
Do gift cards expire and which types typically do or don’t?
Yeah, let's talk about those fees. Sounds like it's important for the recipient of the gift card to keep track of extra charges on their cards.
Right, and they can track those fees online, and the fees tend to be deducted depending on the card at various intervals from the redeemable balance.
Okay, so how are the strong sales of the gift cards expected to affect the economy, and how do they affect the retailer's bottom lines?
Well, they likely won't affect holiday sales because retailers can't record the gift cards as revenue until they're redeemed. But they are a big impetus for people to come back and shop next year. And so the chances are they could boost retail sales early next year.
Now, let's say somebody has a gift card that doesn't charge fees, and so the value of the card isn't eaten away. If they never use it, where does the money that's tied up in the card go?
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:28
2
Why are gift-card sales booming during the 2020 holiday season?
0:28–1:27
3
How much have gift-card sales increased compared with last year?
1:27–2:10
4
Why are shoppers choosing e-gift cards instead of physical gifts?
2:10–3:03
5
Do gift cards expire and which types typically do or don’t?
3:03–4:23
6
What fees can reduce the value of Visa/Mastercard-style gift cards?
4:23–4:53
7
What happens to unused gift-card balances and cards from bankrupt retailers?
4:53–5:10
Speakers
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