Gift cards are becoming more popular these days as consumers run short on ideas and time for shopping for that special gift. In 2005, approximately $18 billion worth of gift cards were purchased. But the Federal Trade Commission offers these cautions regarding the purchase and use of gift cards:

* Read the fine print before you buy. If you do not like the terms and conditions, buy elsewhere.
* When buying a card, ask about expiration dates and fees. This information may appear on the card itself, on the accompanying sleeve or envelope, or on the issuer’s Web site. If you do not see it, ask for it. Make sure that whatever the salesperson tells you is in writing.
* Check on purchase exceptions. For example, can you use a store-specific gift card at both the physical store and the store’s Web site? Can an “all-purpose” card really be used to buy groceries or gasoline?
* Treat gift cards like cash. If your card is lost or stolen, report it to the issuer immediately. You may be out the entire amount on the card. Some issuers will not replace the cards, but others will replace them for a fee.

Recently some retailers have been skirting state laws regarding expiration dates and fees by issuing their gift cards through national banks, making them subject to federal rather than state laws regarding dormancy and transfer fees. In some cases they impose a monthly dormancy fee after one year and a fee to transfer the balances from an expired card to a new one. In this way the value of the card is eroded and, in time, can render it worthless.

As it is, an estimated 5% to 10% of all gift cards’ original balances go unredeemed. This amount was approximately $6 billion in 2005. Unredeemed balances go right into retailers’ pockets.