From Nigeria to Bangladesh and Norway, gift cards are becoming increasingly popular as a form of payment and for gifting. While debit and credit cards are more popular, gift cards are playing catch-up with product retailers and customers. You can invest and trade in gift cards; you can buy them and gift them out to loved ones; you can utilize them to save money or reduce the amount of cash you carry out, and you can use them to redeem prizes you won at retail stores.
What is a Gift Card?
A gift card is a digital or physical card with prepaid amounts loaded on it to make purchases at retail or online stores. It can also contain prize points that can be redeemed in exchange for purchases. Just the way you can use a debit or credit card for purchases at select stores, gift cards can also be used to buy stuff and pay for services at gas stations, restaurants, and retail and online stores.
You can use a gift card yourself to facilitate purchase transactions, and you can also gift it out to your loved ones during Easter, Christmas, New Year, and other social festivities. The recipients will also utilize it to make purchases as you’d do yourself; you only give gift cards to your loved ones as a preference over cash.
Difference Between Gift Cards and Debit/Credit cards
Gift cards and debit/credit cards may serve nearly the same payment functions, but there’s a difference. Depending on the type of gift cards, they may only be used at specific stores and nowhere else – and they usually have an expiry date. This means there are closed-loop gift cards and open-loop gift cards; a closed-loop card is issued by Amazon or Starbucks or Target and can only be used at their specific retail or online stores within given deadlines.
But an open-loop gift card can be used for purchases anywhere the brand of the issuer is displayed. For example, if the open-loop gift card was issued by Visa, it will be accepted at any stores where Visa cards are accepted. So you can purchase and load a gift card with money and give it out as a gift to your loved ones, but you can’t do that with debit or credit cards. While certain stores may gift you a gift card as a reward for your patronage, no company will gift you a debit or credit card for whatever purpose.
Important Facts to know about Gift Cards
There are some things you must bear in mind if you have a gift card so you don’t end up wasting it. Here are some of them:
- Gift cards have an expiry date; the money you have on it will no longer be usable if you do not use the card within the active window period, and you will not be able to use it to redeem gifts or prizes if it expires.
- You may register your gift card online so you don’t lose the monetary value if your card gets stolen or lost. This way, you will be able to track the balance or get it frozen. Gift cards can also be added to digital wallets for future use.
- You may be charged some fees to reload money on your open-loop gift cards, but you cannot load any funds on closed-loop cards – once you dissipate the balance on it, the card becomes useless. You may be charged an activation fee on some cards, and you may also be charged some fees for not using your gift cards after a long time.
- Gift cards cannot be used to build or repair your credit history or to win additional purchase rewards and bonuses – like credit cards.
- Some gift cards can be used to withdraw cash from ATMs.
Is it Possible to Suffer a Gift Card Scam?
Yes, you can be scammed through gift cards. You must be suspicious if you have a strange number call or WhatsApp you, or a solicitation from a foreign country asking if you have gift cards for sale. The person at the other end may offer a huge purchase price for your cards, and he may disappear with the card once you transfer the card numbers to him. Gift card details can also be stolen at certain dubious stores if care is not taken.