To Your Wealth Update – Gift Cards

December 2, 2008

Be aware when buying gift cards this holiday season!

It’s estimated that the retail store gift card market will reach about $100 billion in 2008. That staggering number may seem somewhat unrealistic given our current economy, but regardless, there’s no denying the popularity of this consumer favorite. We wanted you to be aware that buying gift cards, while certainly easy, may not be in your best interests this holiday season. Stores that are planning to close after Christmas are still selling the cards through the holidays even though the cards may be worthless January 1. There is no law preventing them from doing this. On the contrary, it is referred to as Bankruptcy Planning.

Below is a partial list of stores that have either announced closings or filed for protection. Remember, that in some cases only certain stores will be closing and gift cards could be accepted by other stores in the chain. Similarly, just because a retailer has filed for protection, doesn’t automatically mean that they won’t accept gift cards—it only means that they have the right to refuse them.

Circuit City (filed Chapter 11)
Ann Taylor 117 stores nationwide closing
Lane Bryant, Fashion Bug, and Catherine's to close 150 stores nationwide
Eddie Bauer to close stores 27 stores and more after January
Cache will close all stores
Talbots closing down specialty stores
J. Jill closing all stores (owned by Talbots) Pacific Sunwear (also owned by Talbots)
GAP closing 85 stores
Footlocker closing 140 stores more to close after January
Wickes Furniture closing down
Levitz closing down remaining stores
Bombay closing remaining stores
Zales closing down 82 stores and 105 after January
Whitehall closing all stores
Piercing Pagoda closing all stores
Disney closing 98 stores and will close more after January.
Home Depot closing 15 stores
Macys to close 9 stores after January
Linens and Things closing all stores
Movie Galley Closing all stores
Pep Boys Closing 33 stores
JC Penney closing a number of stores after January
Ethan Allen closing down 12 stores.
Wilson Leather closing down all stores
Sharper Image closing down all stores
K B Toys closing 356 stores
Loews to close down some stores
Dillard's to close some stores

As an alternative to giving store-specific gift cards, you may consider buying an American Express gift card, which can be spent the same as cash. Also, if you are the recipient of a gift card this holiday season or if you have any lingering as previous gifts, I encourage you to redeem them as soon as practical. 

Appreciatively,

Michael Haubrich, CFP