TowerGroup estimated that gift card sales topped $80 billion in 2006, up 20% over 2005. That money represents a windfall for companies that issue them Why? Because 10% of gift cards purchased go unused. Read on for 10 tips to think about.

Indeed, that is a drawback for us consumers, we do not always remember or get around to using them. In light of Sharper Image's suspension of their gift cards while they file for bankruptcy, the lesson here is to be careful where you buy gift cards and if you get one from a struggling company, you might want to use it sooner rather than later. Here are 10 things to consider before purchasing a gift card.

1. While 92 percent of the nation's top retailers have no expiration dates or dormancy fees associated with gift cards, it is recommended that consumers understand individual retailers' policies before purchasing gift cards, so read the fine print.

2. You should shop smart for gift cards. To ensure that a recipient receives the card's full value, shoppers should only buy gift cards from reputable retailers (not online auction sites). Gift cards sold through online auction sites are more likely to be counterfeit or obtained through fraudulent means. Additionally, consumers should keep their original receipt with the value of the card they purchased in case there are any problems with the card when it is redeemed.

3. Consumers should be aware that there are big differences between store-issued and bank-issued gift cards. While 92% of the leading retailers have no fees associated with gift cards, card issuers such as VISA and MasterCard are more likely to expire and tack on annoying activation, maintenance, inactivity, and transaction fees. In fact some bank-issued gift cards even charge a fee for simply checking the balance, so be sure to keep up with your balance.

4. Retailers do not count a gift card as a sale when it is purchased, instead, they wait until the gift card is redeemed and merchandise is exchanged. As a result, some of the billions of dollars spent on gift cards purchased for Christmas may not show up in holiday sales, but instead as sales in January or February, when the gift card is redeemed. Retailers are enticing consumers to redeem their gift cards sooner by having special sales and bringing in new merchandise in January to give consumers more of a selection.

5. Spend your gift card before the government takes the money away. While the rules may not kick in for a couple of years, many states have laws which allow the state to collect abandoned property, which means that if personal property goes unclaimed for a certain period of time, the state has the right to take it into the state treasury. Where these laws apply, sometimes in as little as 2-3 years, retailers are required to turn over unused gift card dollars to state governments under the guise of returning the abandoned money to the gift card purchaser. In fact, states make millions of dollars a year from these clauses. Consumers are encouraged to spend their gift cards within the first year of purchase so that they receive the full value.

6. Due to improved technology, some retailers are able to reissue a lost gift card if consumers have kept the original purchase receipt. Some retailers also encourage gift card recipients to register their card through the store's website, which enables them to check their balance online and receive a new card if they lose or misplace the original card.

7. Retailers are adding new features to gift cards, making them more personalized for the recipient. Many retailers are allowing consumers to design their own gift cards, adding personal messages and photos.

8. Another convenience factor is that many stores are able to carry gift cards at their check-out counters because today's gift cards are not active until scanned. Also, many retailers like grocery stores and drug stores carry a variety of different gift cards at their registers for other retailers such as movie theaters, coffee shops, and clothing stores

9. Most of today's gift cards differ from traditional gift certificates because they are a stored value on a card. When a consumer spends $25 from a $50 gift card, the card automatically updates the balance. This is more efficient than the retailer reissuing another gift certificate to the consumer for the balance.

10. Save yourself the guesswork and buy gift cards, especially for babysitters, newspaper carriers, mailmen, teachers and other people that deserve from you. Gift cards are a great way to let gift recipients choose what they want, save time shopping and it is an easy way to stick to a budget.

Labels: gift card, money saving tip