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Store closures make gift cards risky to buy

MARK FISHER/STAFF
MARK FISHER/STAFF

Gift cards were the second most popular present given during the holiday season, but a good chunk of them will go unused in the new year, according to the National Retail Federation.

Local retailers typically see a post-holiday influx of business, as shoppers come back to stores to return gifts and cash in their gift cards. But about $1 billion of the $130 billion spent on gift cards last year went unused, according to research organization CEB Towergroup, and that trend is likely to stay steady in 2017.

About 61 percent of people in the U.S. wanted to receive gift cards for the holidays, and more than half said they planned to give them, according to the NRF.

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“(Consumers ) come in to purchase items with gift cards,” said Gordon Gough, president and CEO of the Ohio Council of Retail Merchants. “Or, they’re wanting to come in and get some sales and deals after the holidays.”

Holiday shoppers were expected to purchase an average of three gift cards with an approximate value of $46 per card, the second most-popular gift after clothing. In the holiday season alone, spending on gift cards was expected to reach more than $27 billion, up from the $26 billion spent last year.

The most popular gift cards to buy this year went to restaurants, department stores, coffee shops and entertainment, according to the NRF.

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So why do so many gift cards go unused? The receiver may simply dislike gift, or they may not use it in time before the expiration date.

“There are several types of cards you should avoid buying because they have restrictions that make them difficult to use, purchase fees or are issued by stores that are struggling financially,” said Cameron Huddleston, GOBankingRates.com columnist.

GOBankingRates.com releases the best and worst gift cards to give each year, and considered criteria including purchase fees, expiration dates, reward options, balance requirements, and shipping options in creating the ranking list.

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The worst gift cards to buy this year included: Aeropostale, Ace Hardware, American Apparel, American Express, AutoZone, eBay, Golfsmith, Kmart, Logan’s Roadhouse, Mastercard, Sears and Visa. Several of these companies have filed for bankruptcy or closed a significant portion of their stores. Other gift cards carry hidden fees for the person purchasing it.

The best gift cards of the year included: Amazon, Walmart, Target, Best Buy, Nordstrom, Kohl’s, Macy’s, JCPenny, Gap, Starbucks, The Home Depot, Lowe’s, Toys R Us and Fandango. Shelley Hunter of GiftCards.com told GoBankingRates that people tend to use e-commerce gift cards due to their convenience and versatility.

"You can buy almost anything on Amazon," said Hunter. "The best gift card to give is the one the recipient wants."

RELATED: Online sales driving increases in holiday shopping

If a consumer has already received a gift card they don’t want, there are some alternatives to throwing it away:

• Re-gift the card to someone else who might use it.

• Several websites allow consumers to sell and buy gift cards online for a portion of the value. Those websites include cardcash.com, raise.com and cardpool.com.

• Consider donating an unwanted gift card to a charity, food bank, church or homeless shelter.

The Associated Press contributed to this report.