Some gift-card issuers charge a fee if a card hasn’t been used after a year.
Finding the right gift at the right price can be challenging. Whether you shop online or at the mall, watch for these sneaky retailer tricks that can cost you precious dollars this holiday season.
“Door-buster” sales promise big savings, and not just on Black Friday (the day after Thanksgiving) and the following Cyber Monday (when shoppers go online). But sale items might not be the best deals. Some merchants, such as Kohl’s, seem to have almost everything on sale most of the time. And their sale prices can be beat. We found an electric percolator “on sale” at Kohl’s stores and Kohls.com for $61.99, a discount from the retailer’s posted $69.99 “regular” price.
But those prices are higher than the $59.99 manufacturer’s suggested retail price. Retailers, especially discount stores, commonly sell products below MSRP. Using a Web search, we found retailers that were offering better deals. The best price was $30.03 plus $8.21 shipping at Salestores.com.
What to do
Comparison shop before you buy. Include shipping and handling charges when you compare online and walk-in stores. Don’t be worried that you’ll miss out on a great deal if you skip doorbuster sales. It’s likely that another one will come along before the season ends. You might do just as well by signing up for e-mail alerts from your favorite stores.
New federal rules for gift cards limit issuers’ ability to charge certain fees and impose expiration dates. Inactivity and service fees can be charged only if a card hasn’t been used for at least one year. But issuers still can charge fees to buy the cards, as they usually do for the bank-issued variety, those that bear a credit-card logo. For example, expect to pay $3 to $7 for an American Express gift card.
Issuers are not required to set aside gift-card proceeds to protect them from bankruptcy proceedings or to make them eligible for federal deposit insurance coverage. So if a retailer or financial institution that issues gift cards goes belly-up, the cards could become worthless.
Beyond that, many people never get around to spending their gift cards. A quarter of the people we surveyed in October 2009 who received a gift card the previous year said they hadn’t yet redeemed their almost year-old cards.
What to do
If you can’t decide what to buy, give cash or a check rather than a gift card. Cash never expires or loses its value due to bankruptcy, and it’s good anywhere. And if your check is never cashed, the money stays in your bank account.
Salespeople push service plans because retailers keep 50 percent or more of what they charge for them. But extended warranties are notoriously bad deals. Some repairs are already covered by the standard warranty that comes with the product. And Consumer Reports’ data show that products seldom break within the extended-warranty window. When items do break, the repairs, on average, cost about the same as an extended warranty.
What to do
Some credit cards automatically extend the manufacturer’s warranty on anything you buy with them, so check your card’s website to see whether that perk is offered and how it works. Even if the manufacturer’s warranty has expired, a retailer or manufacturer might choose—or even be legally obligated—to make good on a product that fails prematurely or otherwise shows signs of having been sold with a defect.
Some retailers relax their return policies during the holiday season. But you can’t count on that, so learn the rules before you buy. And companies might have different return requirements for items that are bought in their stores, through their website, or by mail order. You’ll probably need the receipt, the box the gift came in, and the retailer’s enclosed mailing label.
What to do
Give the receipt along with the gift, and let your recipient know the details of the merchant’s return policy. You might need to call or visit the merchant’s website for specifics, such as whether you can return something that was purchased online to a walk-in store.
Many items, especially electronics and special orders, are subject to restocking fees that range from 10 to 25 percent if they are not returned in a factory-sealed box.
What to do
Don’t open a package if you don’t want what’s inside. Items such as computer software, music CDs, and movie DVDs generally aren’t returnable if the seal is broken. If you are slapped with a restocking fee, try to negotiate a partial refund. But you don’t have to pay a restocking fee if the item is defective.