A reminder of gift-card gotchas

Every year at this time, gift cards become a hot topic, and we’ve written more than our share on the subject, explaining the various tricks and traps. 

Nevertheless, gift cards remain one of the most popular gifts to give and to get, though last holiday season marked the first time in four years Americans actually reported receiving fewer cards, according to our latest Consumer Reports holiday shopping poll. Moreover, one of four gift-card recipients have yet to redeem a card they received in 2008.

Bankrate.com, a personal finance Web site, just released a new study comparing the terms and fees associated with 29 different gift-card issuers. Bankrate’s findings are a clear reminder that all cards aren’t created equal. You can read the entire report by clicking here. In short:

• If you don’t spend the card after the first 12 months, you could be hit with unexpected fees. In September, American Express announced it would no longer charge a $2 monthly service fee after 12 months -- and that change is retroactive to old cards, too. However, Bankrate’s study found that Discover, MasterCard, and Visa still tack on a $2.50 monthly maintenance fee after 12 consecutive months of inactivity.

• Store gift cards are free, others aren’t. There’s typically no charge to purchase a gift card from your favorite merchant. But if you choose to buy the gift card online instead of at the store, you could be hit with a handling fee. At Starbucks, for example, the fee is $1.50. Credit-card issuers, by contrast, always charge a purchase fee, typically $3.95, though it can vary depending on the card’s value.

• Pay attention to the "valid-thru" date. It’s something you’ll find on cards issued by credit card companies. While technically not an expiration date, it reflects the estimated lifespan of the card’s magnetic stripe. Shelf life for the stripe is about five years, and if you have a card with a past-due valid-thru date, contact the company for a replacement card.

• When buying a gift card from an individual merchant, be sure to ask if the card is valid for online use. While it’s not an issue for most retailers, some companies such as CVS, T.J. Maxx, and Marshall's do not allow their gift cards to be used online, Bankrate says.

• The federal Credit CARD Act pertaining to gift cards takes effect on Feb. 22, and the regulations require that the cards remain valid for at least 5 years, unless that information is clearly disclosed on the card. Dormancy, or inactivity, fees will still be allowed after 12 consecutive months of inactivity.

 Postscript: Don’t throw away those old gift cards

Speaking of gift cards, here’s a lesson in how persistence can pay off handsomely. On a recent shopping trip to a Bloomingdale’s in New Jersey, my colleague Donna Tapellini presented the cashier with three $50 store gift cards, two of which had expired, according to the saleswoman. Tapellini was annoyed and prepared to walk away, but her partner, Corey Glaser, who’s doesn’t easily take no for an answer, wasn’t about to give up.

“Isn’t there something we could do?” Glaser asked the clerk, emphasizing the fact that the couple had just given the store plenty of business.

The clerk, clearly peeved and dismissive, suggested Glaser and Tapellini call the phone number on the back of the cards, though she didn’t hold out much hope. They called anyway.

After entering the serial number for the first card, the automated robot voice on the other end confirmed the fact the card was expired, but then instructed them to “press one.”  Upon doing so, the voice said, “Your card has been activated.” The same thing happened with the second card. By investing a couple of minutes, they found $100. Not bad.

Walmart's return policy goes underground?

When we recently blogged about Target’s decision to expand its return policy, we chided the retailer for not providing complete details, either online or in its stores. (Customers now can make up to $70 in non-receipt returns in a 12-month period, and the retailer allows for even exchanges without a receipt).

We suggested that Target compare its disclosure with Walmart, which we said is much more open about its policy, which is friendlier than Target’s

One reader responded by saying that the Walmart disclosure we pointed to online was nowhere to be found. So we went back and looked again.

It turns out that the Web page describing  Walmart's consumer-friendly in-store return policy still is available . The problem is that, unless you know the exact URL, there no longer seems to be any way to find the page. Now when we click on the “Returns Policy” link, we find no mention of Walmart’s policy for non-receipt returns for purchases either online or in its stores.

A representative in Walmart’s communications department told us that the returns policy page had been rewritten to make the policy less confusing.

Well, we weren’t confused before. But we are now.

The representative promised to check into whether Walmart could restore the link to the page that fully describes its liberal returns policy, which she assured us is still in effect. After weeks of not hearing back, we called again last week and were assured by yet another communications representative that the retailer would get back to us. So far, no word. So we’ve decided to give up on waiting for the Walmart’s non-communications staff to get back to us.

All we can say is it looks like Target isn’t the only store keeping a secret. (If we do ever hear back from Walmart, we’ll post its response.)—Anthony Giorgianni 

A short list of weekend shopping deals

As we’ve been reporting, retailers aren’t withholding all of their best deals for Black Friday. We scoured various store flyers to check out the latest round of sales on tap for this weekend, and there’s no shortage of bargains. Here’s a smattering of the sales at some big chains:

Sears – Doorbusters 7 a.m. to noon today. Twenty-percent off all Kenmore appliances, 10 percent off all other brands.

Kmart – This weekend’s Better-Than-Black-Friday Sale features a 40 percent discount on outerwear for women and children, as well as sales on electronics like GPS navigators. We found a Garmin Nuvi 205 for $120, a solid buy. Click here to see our latest GPS Ratings.

Bloomingdale’s – Twenty-percent off almost all regular- and sale-priced merchandise for women, men, kids, and home, and 10 percent off of small appliances and men’s electronics.

JR.com – The electronics retailer/e-tailer is featuring special pricing on select digital picture frames, notebook computers, camcorders, digital cameras, and the like this weekend. The deals were pretty good from this well-regarded chain. (For our recent Ratings of electronics chains, click here.) Pricing for the Casio EX-H10 Exilim 12-megapixel digital camera, was $230, well below the prices we found when we tested it.

Kohls – From midnight today (EST) through 4 p.m., online shoppers can save 50 to 60 percent on selected shoes and boots and 50 percent off of the chain’s Apt 9 sportswear line for women. The same deals are available in stores at 6 a.m. to 1 p.m. (local time). Shoppers will also get $10 worth of “Kohl’s cash” for every $50 spent through Sunday.

CompUSA – This weekend’s Early Black Friday deals include a Garmin Nuvi 255W for $150 (we found similar prices from other online merchants), Toshiba 32-in. 720p LCD HD television for $329 (a good price), and the CR-tested Samsung 40-in. LED 120HZ HDTV. At $1,500 the price is at the high end of the range, but drops by to an impressive $1,199 thanks to a special e-mail promo code included in the ad.

Land’s End – Through Nov. 16, the chain is running a family-and-friends event offering 25 percent off regular-priced merchandise along with free shipping.

Toys “R” Us – On Saturday, take an additional 25 percent off any bicycle purchase with online coupon.

Medicare Part D participants: For 2010, you better shop around

Medicare has announced its Part D drug plan costs for 2010. More seniors than ever will be combing through that data to try and find a better deal. Sixteen percent say they are likely to, or are considering, switching plans in 2010, according to a recent survey of seniors by Allsup, a provider of Social Security disability, Medicare and workers' compensation services. That’s a big jump; only five percent have switched since they’ve been eligible for the program.

However, figuring out which program is best for you can be a pain. You may have dozens of private plans to choose from, with different levels of coverage.

But staying put can cost you plenty, in terms of both access to the medicines you take and the amount of money you will spend. Consumers Union has been monitoring the total cost of buying five common drugs in five states since the Part D program began in 2006. Next year Illinois residents, for example, may be able to save more than $2,200 year if they switch to a better plan. Stay stuck in the wrong one, however, and your costs may rise by more than $1,500.

Open enrollment starts November 15 and runs through the end of the year. You can find out how to switch plans (or enroll) by going to the Centers for Medicare and Medicaid Services Web site.–Mandy Walker

Cash for unwanted electronics

Looking to get rid of an old computer, digital camera, or MP3 player? Sears just launched a new trade-in and recycling program that allows customers to exchange unwanted electronics for gift cards redeemable online or in stores.

Here’s how the program works:

Log onto sears.gazelle.com, where you’ll be prompted to enter brand and model information, indicate whether the device works or is damaged, and answer questions about condition and the presence of various accessories. In the case of personal products like MP3 players, you’ll also need to reveal whether the gadget has been monogrammed (which decreases the value).

Once you’ve provided the information, click ‘calculate,’ and up pops the trade-in value. A Nintendo Wii gaming console, for example, in perfect condition with all of its accessories, is worth $102. In poor shape, it’s worth just $20.

Other products eligible for trade-in include cell phones, PDAs, video games, movies on DVD, camcorders, GPS systems, Blu-Ray players, satellite radios, camera lenses, calculators, and home-audio gear.

In partnership with Gazelle, a dedicated gadget buy-buyback company, Sears offers free live chat support and pledges to wipe all items clean of personal data as part of its inspection process.

If you’re satisfied with the offer, the company will provide free shipping and packaging to return the equipment. You’ll get your Sears gift card in a week or so. Sears will also accept for recycling electronics items that no longer work. Recycled items, however, have no trade-in value.

As a special holiday promotion, Sears says participants will receive a 5 percent bonus over the actual trade-in value through Dec. 31.

Black Friday comes early at big chains

With analysts predicting aggressive holiday sales this season, many retailers have gotten a head start on Black Friday by dangling generous discounts well in advance of Nov. 27. 

Walmart, Kmart, Sears, Toys “R” Us, Best Buy, CVS, Target, Staples, HH Gregg, Kohl’s, Lowe’s, and Ace Hardware are some of the big names hoping to cash in by enticing early birds with bargains prior to the day after Thanksgiving, traditionally one of the busiest and bargain-laden shopping days of the year.

You can scope out many of the deals – and rumors of deals – ahead of time at a variety of Web sites such as Black Friday Ads, The Black Friday, TGI Black Friday, Black Friday Info,  Deal News, Deal Taker, and Black Friday FM.

The most efficient way to discover what’s on sale at your favorite stores or online is to sign up for e-mail alerts. By doing so, you’ll also be privy to special offers like free shipping, announcements of upcoming promotions, exclusive savings for store credit-card holders, deals of the day, and periodic markdowns like special 3-hour sales. One note of caution, however. Many of the doorbuster ads on retailer Web sites often lack a model numbers for big-ticket items like computers and TV sets. That can hinder comparison shopping.

This year, Walmart ushered in Christmas on Halloween with Black Friday pricing on a variety of “secret” in-store specials. They’ve also cut prices weekly on thousands of items from bananas to board games throughout the holidays. More recently, the company announced additional price rollbacks of an additional 20 to 30 percent on 100 popular toys, which comes of the heels of the chain’s season-long holiday promo of 100 toys at $10. Perhaps of even more note, the chain said on Wednesday that it will keep all of its stores open round-the-clock on Thanksgiving weekend and implement new crowd-control measures in the aftermath of last’s years fatal trampling of an employee during a frenetic Black Friday sale. The chain has also devised another strategy to deter mayhem. Instead of lining up outside the doors for the 5 a.m. sales to commence, people will be dispersed in gathering areas throughout each store.

Over at Sears, the chain began offering “Black Friday Now” deals on Oct. 31, and they’re slated to continue every Saturday from 7 a.m. until noon through Thanksgiving.  Some of the early bargains included a Craftsman 302-piece mechanic's tool set at half off; a ProForma XP elliptical exerciser for $400 (regularly $700), and a 42-in. Zenith Plasma TV for $499, a $250 savings.

Kmart kicked off its “Better than Black Friday” campaign last week, which features 15 new doorbusters on Fridays. Some of the recent deals have included Protégé basketball shoes at $15 a pair, General Electric artificial Christmas trees at 25 to 33 percent off, Basic Editions jeans at $7, and a Little Letters Learning Laptop at half price.

Earlier this week, Target took aim at Walmart by taking pre-orders of some highly anticipated DVDs at $10, the same price point they sell for at the nation’s largest retailer. The $10 price applies to pre-orders on Target.com of 10 select DVDs: “Star Trek XI,” “Night at the Museum: Battle of the Smithsonian,” “Harry Potter and the Half-Blood Prince,” “Angels & Demons,” “Four Christmases,” “G-Force,” “My Sister’s Keeper,” “Santa Buddies,” “Terminator Salvation,” and “Julie & Julia.” At the same time, Target implemented price cuts on hundreds of hot new toys from Fisher Price, Ni Hao Kai Lan, Barbie, LIV, Furreal, Star Wars, Ben 10, and Air Hogs.  For guests hoping to get a head start on the gifting season, November deals include over 400 price cuts, which began rolling out November 1. Many toys will be on sale for 50 percent off through Nov. 25.

Best Buy is making a pitch to draw in value-conscious consumers by offering a $250 computer, the cheapest laptop the chain’s ever sold. The Acer laptop, with a Intel Celeron 900 processor, 2 GB memory, and a 160 GB hard drive, went on sale in stores and online earlier this week.

Another electronics chain, HH Gregg, is rolling out its pre-Thanksgiving blockbusters tomorrow and Saturday from 10 a.m. to 9 p.m. Highlights include several Panasonic flat screen HDTVs, notably a  58-inch 1080p model with three HDMI inputs for $1,500, several hundred dollars less than we’ve seen elsewhere. If you’d prefer alternative to the models on sale, the retailer is applying extra discounts of $20 to $200.

Look for bigger, better, and earlier deals this holiday season

Jack Abelson has been following the retail beat for years. He’s an analyst, consultant, and industry expert, and I’ve called on him from time to time for more than a decade for his unique insider’s take on how the latest trends and issues impact consumers.

With retailers fighting for survival in tough economic times and shoppers wondering what sort of deals will be available this holiday season, I asked Abelson, who operates Abelson & Associates out of Leawood, Kansas, what consumers might expect to see online and in stores.

TT: Did holiday promotions begin earlier this year and are the discounts more aggressive early on than in the past? It seems like many retailers have been cutting prices and dangling deals since Labor Day. Am I imagining things, or have retailers, in fact, been promoting holiday sales/savings earlier?

 Abelson: For over 25 years, retailers have embraced promoting (read, "sale") as the main driver of their business.  In order to achieve sales gains over the year before, the discounts have to be deeper and more prolonged.  Add to this a skittish consumer and the result is very predictable. So, the answer yes.

CR Index: 25% to spend more on personal electronics

A quarter of Americans–24.9 percent–expect to spend more this month on personal electronics, according to the Consumer Reports Index, a composite of five indices measuring consumer behavior, attitudes, and consumption patterns. And short-term plans to purchase major home electronics rose slightly, to 10.7 percent from 10 percent in October, the highest level since June.

In addition, perceived financial problems, including difficulties making credit-card payments and covering medical bills, may be stabilizing, according to the Consumer Reports Trouble Tracker and Stress indices, two components  of the Consumer Reports Index. In the West and South, survey respondents reported fewer troubles in early November than in the prior month. In the Midwest, perceived troubles appeared to be slightly (up 2.4) worse. Northeasterners’ opinions stayed about the same.

Those optimistic results are the bright spots in a report that generally shows consumer plans and attitudes at a slow simmer. Two weeks before the official start of the holiday shopping season, planned purchases were flat or lower in most categories, including appliances, yard and garden goods, cars and homes, according to the Consumer Reports Next-30-Day Retail Index. (The survey underlying the Index was completed before Congress extended and expanded a one-time $8,000 tax credit for new-home buyers.)

Ed Farrell, a director of the Consumer Reports National Researcher Center, which created the Index, posed a cautionary note. “The economy remains in a precarious position where further decline is possible but is slightly less likely,” Farrell said. “Unless consumers can see concrete improvements in their lives and retail activity picks up, any near term recovery is improbable.” 

For more details and information on how the Consumer Reports Index is conducted, click here.

Considering a layaway purchase? Read this

Last year at this time, Sears and Kmart helped consumers rediscover the old-fashioned concept of the layaway purchase, in which shoppers make periodic payments to a special account to save up for big-ticket goods and take them home only after they’re paid for in full.

With so many Americans still struggling financially and reeling under credit-card debt  -- our recent holiday poll reveals that an estimated 13.5 million consumers are carrying debt leftover from last Christmas – layaway is likely to be an even more attractive alternative to pay for gifts this holiday season. Beside Sears and Kmart, major retailers offering layaway plans include Toys “R” Us, Babies “R” Us, TJ Maxx, Marshall’s, and Burlington Coat Factory.  Layaway is also available for many online purchases through third-party firms like eLayaway, which has an affiliate relationship with more than 1,000 merchants such as Best Buy, Bass Pro Shops, Apple Store, and The Home Depot.

If you’re unfamiliar with the layaway process, here’s how it works:  You enter into a contract and make an initial deposit based on a percentage of the purchase price, along with a service fee to administer the plan and keep the item in storage. There are no interest payments, since you don’t actually take possession of the merchandise until you’ve paid for it.

Like any transaction, you can avoid potential pitfalls by doing some preliminary legwork. Toward that end, the Better Business Bureau just released a checklist of key questions to ask before opening a layaway account:

• How much time do I have to pay off the item? The usual timeframe is usually 30 to 90 days.

• What’s the minimum down payment? Ten to 20 percent is common.

• When are payments due? After the initial down payment, some contracts require additional contributions weekly or every two weeks; some let you make payments whenever you want during the timeframe.

• Are there storage or service-plan fees? Kmart charges a flat $5; Toys “R” Us has a $10 fee.

• What happens if a payment is missed? Are there penalties? Does the item return to inventory? If you miss a payment or fail to pay the minimum due, you might have to double up on your next scheduled payment.  At some stores, the merchandise is returned to the shelf as soon as 7 days after a missed payment.

• Can I get a refund or store credit if I no longer want the item after making a few payments? Cancellation fees typically range from around $5 to $10. At Burlington Coat Factory, layaway deposits and payments are non-refundable, but may be converted to a gift card if layaway is cancelled. In addition, the company won’t give you a refund if you decide to return an item you’ve paid for in full, only a gift card.

• What happens if the item goes on sale after I’ve put it on layaway? Kmart won’t make any price adjustment after 7 days from the date you open a layaway account. Sears gives customers a 30-day window.

• Get it in writing. Don’t take the salesperson’s word for it. Ask for the complete terms and conditions in writing. And be sure to keep detailed and accurate records of all payments made.

Layaway plans aren’t specifically regulated by Federal law, although the Federal Trade Commission can go after a company for unfair or deceptive practices. Click here for information about filing a claim. Check with your state attorney general, local consumer protection agency, or the local Better Business Bureau  to find out if state or local laws cover layaway purchases.

 

Ready or not, here come the holidays

Although the Halloween decorations may still be tacked to the door and most of us haven’t thought about our Thanksgiving menus, it’s not too early to begin talking about holiday shopping and everything that goes with it – the traffic, the crowds, the long lines, and the deals.

 As you may have read here on the Money blog last week, the results of our first holiday poll, designed to gauge what Americans will be buying this season, how much they’ll be spending, and whether the ongoing economic crisis is dampening their festive spirit, indicate that 2009 is likely to be a carbon copy of last year.

Once again, consumers said they plan to cut back this season. Sixty-five percent of those polled, in fact, said they intend to do less traveling, entertaining, and spending on gifts. That’s on top of the three-quarters of consumers who told us last year they planned on tightening their belts.

It’s easy to understand why so many consumers continue to watch their wallets. Statistics released today by the U.S. Bureau of Labor Statistics reveal that the unemployment is at its highest since April 1983. In October, unemployment rose from 9.8 percent to 10.2 percent, as the ranks of the nation’s out-of-work force swelled by 558,000, to 15.7 million. In retailing alone, more than 40,000 jobs were lost last month.

Despite the grim statistics, Americans remain largely optimistic. Eighty-seven percent of survey respondents said they expect to be at least as happy this holiday season as they were last year; 33 percent are predicting they’ll be even happier. So hope does spring eternal.

While we can’t do much in the cheer department, we can offer advice on how to take advantage of the latest retailing trends in order to stretch your shopping dollars. And that’s what we’ll be doing over the next couple of months. The results of our second poll, due out soon, promises to offer insights into the nation’s shopping habits – the extent to which the Internet is figuring more prominently in our purchasing plans, where consumers think they’ll find the biggest bargains, and the must-have presents on their Black Friday shopping list. We’ll also be identifying the most annoying aspects about holiday shopping, also based on a nationwide survey.

As you put together your shopping list, here are a few tidbits to keep in mind, based on a closer look at the results of our first poll:

 • Gift cards. They’re one of the most popular gifts to give and receive, yet one of four recipients still haven’t used at least one of the cards they were given last year, mainly because they couldn’t find anything they wanted to buy.  Moreover, 65 percent of those who used their gift cards – especially women -- purchased an item that priced in excess of the card’s face value. That explains why retailers push card sales so aggressively.

 • Who doesn’t like clothes? Clothing is the biggest holiday gift category and, like gift cards, people love to give and receive apparel. But survey respondents told us that clothing also tends to disappoint the most. If you want to be a hero for the holidays avoid giving socks, shirts, sweaters, and ties, the least desireable of garments and accessories. Also making the most-reviled list this year for the first time: slippers.

 • New favorites. Most people tend to give and get the same presents year in and year out. But our poll revealed several new items that made the list of gifts respondents said they’d be thrilled to receive: boots, purses, pajamas, and guns. The latter’s not a typo, and we’ll avoid making any value judgment. We’re just reporting the facts.

• Fewer people are planning to give money. Despite the fact that money ranks behind only electronics and gift cards as the present they’d most like to receive, Americans won’t be opening their wallets as wide this season. Only 44 percent are considering giving a cash or check this year vs. 61 percent in 2008.

 • Women more likely to scale back on gifts to others. Here’s a statistic we didn’t see coming. When asked whose gifts do you plan cutting back on to save money, women were more likely than men to target family (including their children), friends, co-workers, and service providers (hair stylist, deliver person, etc) instead of themselves. Men, on the other hand, more willing than women to cross teachers and the family pet off their lists.