Robyn Murray, Manager at Dunedin Advisory, looks at the pros and cons of that last minute Christmas gift purchase
With 3 out of 5 of us leaving Christmas shopping to the last minute and 69% of people opting to give gift cards or e-gift cards as festive presents, should we consider just how safe are they? While a recent Royal Mail study found that a quarter of people in the UK actually want to receive a gift card, media headlines last Christmas reminded us that if the shop or business goes into administration (as around 38 high street names did last year)then the gifts cards may be left worthless.
So, what are the pros and cons of treating a loved one to a festive gift card?
- E-gift cards are quick and efficient to purchase and send
- Some offer options to extend the expiry period
- They allow the recipient to choose a gift they truly want
But, beware
- Most have an expiry date within a year and can be difficult to extend
- Media coverage of declining High Streets is having an impact on smaller business stability
- If the issuing retailer enters an insolvency process your gift card may not be worth anything
- How reliable are the issuers of third party companies operating multi outlet cards?
Some tips on how to protect yourself:
- Check the small print
- Be aware of retailers who have announced difficult trading and risk of closure
- Purchase all gift cards with a credit card as this provides added security in event of provider default or insolvency
- Restaurant vouchers – check availability of booking event prior to purchase – can they take reservations at peak times within the gift card expiry date?
- Ensure they are used as soon as practicable
So, in conclusion, gift cards and e-gifts are definitely a good option if they are spent quickly and purchased by credit card for an added tier of protection.
Retailers who have a healthy position and are selling their own products should proactively promote the terms of use and the security of buying a gift card.
Choose your retailer carefully. Many consumers are not aware of the risks of losing out on gift cards particularly where failing retailers continue to sell or companies offering multi retailer outlets are doing so without sufficient company reserve to fulfil commitments.
