Tag Archives: gift cards

Gift Cards and Easing Into New Year’s Resolutions

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There’s a good chance you were on the receiving end of some gift cards this Christmas. With billions of dollars sold,  you need to make sure you actually redeem them. Over 8% aren’t ever used – great for the merchant to get the free money – not so good for you.

The best tip is to get a felt pen and write the amount on them. Then tape them on the fridge, put them in your wallet, or any place prominent so you won’t forget. Remember that you have an IOU and that’s only good as long as the store or chain is still in business. If it’s Tim’s or Walmart – not a rush. But, the smaller the store, the quicker you want to use them up.

If you don’t use the full amount, write what’s left on the card as well. If it’s down to very little, do what I do: Just hand it to the person behind you in line and tell them what’s left on the card. That way they can redeem it right then and there.

Today and tomorrow, it’s likely everybody will make their New Year’s resolutions. But studies keep showing half of them are toast by the middle of January. News flash: You won’t run a marathon this summer, lose 60 pounds by April, or become debt free next Tuesday.

So perhaps you can resist the pressure to set New Year’s resolutions that are destined to fail. How about you do a two-month test drive on some smaller ones? If they’re specific, in writing, measurable and short-term, there’s a much better chance you’ll keep them.

Want to save some money? How about just taking the $200 or whatever you want to save each month and taking it right out of your ATM the 1st of January? Put it under your mattress or wherever. Do it for two months and you’ll see that you really won’t miss it. Good chance you’ll keep that two month trial going….

Can you take your smallest debt, perhaps one of your credit cards, and pay it off by March 31st? It’s the smallest, so no need to freak out or sell everything on Kajijji. If that worked out – great! That bill is now gone – permanently. Since your subconscious mind now knows you can do this, take the next smallest. It might take three or six months, but it’s just one debt, just one payment – you know you can do this, too.

Want to save some serious money for the next two months? Can you avoid restaurants or bars for 60 days? Of course you can – but will you? We average $190 on those each month. There’s around $400 or more by figuring out how stuff in your fridge turns into food, instead of having others make that happen for you.

Test drive some small ideas for two month. It takes 21 days to form a new habit. 60 days is long enough to see if you’ll stick to it for longer. No pressure…it’s just you and your money, debts, and disposable income. Happy New Year!

PS: Just saw a great Facebook post: I’m opening a gym called “resolutions.” It’ll have fitness equipment for the first two weeks and then it’ll turn into a bar for the rest of the year.

 

 

 

Wishful thinking versus goal setting. One is a hope and a dream that someday, something will change. Goal setting is in writing, specific and measurable.

I love my GPS. I travel a lot and can’t imagine life without it. But I can punch in all the destinations in the world, it won’t work if I don’t first know where I’m at! That’s the same with your financial goals.

 

If you’re not willing to take the 20 minutes to write down…don’t bother – you’ll just be staying in “hope” land. It would be kind of like firing a gun into the air and hoping a duck will run into its path.

More Retailers Go Bankrupt and You Still Want To Own Gift Cards?

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Last Saturday, without notice, Future Shop ceased to exist. Best Buy, the parent company, closed 66 or so stores immediately, and about the same number will be closed for a week, then reopen as Best Buy. Two days earlier, the parent company of Ricki’s, Cleo and Bootlegger filed for bankruptcy. The week before, XS Cargo went under, and Mexx, as well as Jacob’s closed operations in Canada, in addition to the bankruptcy of Target Canada.

These companies going under isn’t something they are going to advertise in advance. So, once again, I’ll ask: Why on earth do you want to own or give any gift cards? You’ve given them your cash which never goes bad, in the hope that store will still be around when you or the recipient of that gift wants to use it? How many more scares do you need to realize gift cards are not your friend. You’re turning cash that can be used anywhere and anytime into an IOU for one specific store, and it’ll be wiped out when those businesses go under.

If you have Target gift cards, you may want to try using them online with Target US. With XS Cargo, Jacob’s, Mexx, Ricki’s, Cleo and Bootlegger you’re out of luck. Since Best Buy didn’t go under yet, the Future Shop gift cards can be used in their stores, so you dodged a big bullet for now. Make this a big heads up to gift cash that doesn’t expire, has no fees or restrictions and doesn’t go bad. Don’t stick someone you’re gifting with something that may be worthless when they want to use it! If you absolutely have to gift a piece of plastic, make it a prepaid Visa or Mastercard. It’ll have an upfront fee of $2 or $3 but that’s buying peace of mind it’ll be good next week or next year!

One more quick thing:

Good bye Suze Orman. She won’t have her CNBC television show anymore. I’m not a fan, but that’s a personal opinion. I lost a lot of respect for her being spokesperson for one of the fastest depreciating vehicle lines in North America. Plus, telling callers to diversify their investments, buy mutual funds, etc. when personally she only has Municipal Bonds as investments. There’s a great Slate Magazine expose on Orman from a few years ago.

Three Money Saving Heads Up Tips

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If you buy your own tax software, here’s a big heads up. One of the more popular Canadian programs is Turbo Tax by Intuit. Usually tax software is $20. This year, Turbo Tax has a $10.00 program for sale. But be careful! It is so barebones that you can’t even put RRSPs in there – I’ve seen it. Clark  Howard, on 400 radio stations in the US, calls it rotten behavior that stabs loyal repeat customers in the back by making them then call to pay a lot extra for an upgrade they can actually use. Apparently when you call to complain that the $10 one is useless, customers are often getting the upgrade for free…Buy the more expensive version, call them to complain, or purchase UFile for $20.

Have you had your 59th or 60th birthday? A good reminder from a Marketplace story that we talked about a couple of years ago. With every bank, when you reach that milestone birthday, you’ll get a ton of free service charge packages – depending on who you deal with. Only one or two banks give them to you automatically. With the rest, they’ll happily keep ripping you off until you go in to turn off the ‘charge’ button. You have to be pro-active and ask! I’ve personally seen stories of seniors paying $20 or $30 a month for years and years because the banks aren’t going to give up their profit voluntarily. And remember that when you do find out, the most you’ll get refunded two months. That’s as far back as you can challenge incorrect items on your statement. If it doesn’t apply to you – call your parents or grandparents and tell them!!

For three years, I’ve had an unloved, unused gift card here on my desk for Fairmont Hotels. It’s $150, but unfortunately, that amount doesn’t get you in the door at that hotel chain. I’m more of a $50 hotel person. We’ve talked previously about selling your unused gift cards online, and about a fundraising idea for gift cards. But Walmart has a better idea that they just rolled out. Wal Mart will take your unused, leftover, unloved gift cards and exchange them for a Wal Mart card. You might not be the biggest Wal Mart fan, but you know there are things in their stores you can actually buy and use. What a total win-win and I can’t wait for that to roll out across all their stores.

What’s Your Bank Balance, Gift Cards & Target

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What’s the balance in your checking account? In February 2013, the finance minister of Zimbabwe admitted that the entire public accounts of the country had a balance of $217. Yikes…one of the best examples of a country becoming a basket case because of politics way more than economics.

Target is coming! Many people are pretty excited about the Target launch in Canada. If you’ve shopped at their stores in the U.S. you’ll be very disappointed. Sure, the stores will look the same, but you’re dealing with Canadian duty and prices. Don’t look for the cool US-type deals and prices. They will have the Target debit card and MasterCard. Both will give you 5% off right at the store register. The applications are on the Royal Bank site now. If you think you’ll shop there a lot, it may be worth getting. The rate is 20% like every other regular card but no annual fee.

Gift card heads up: Criminals are now able to get your code number from a gift card. Investigators don’t know how they do it, but it’s happening. You get a gift card and go to the retailer to purchase something only to find out at the register that the card has already been used up. All you’ll get told is that, sorry, nothing they can do – not their problem. Pursue it, report it, and don’t give up. If you’re giving a gift, make it cash. If you have any gift cards, use them up as soon as possible. Better safe than sorry.

Tricks and Gimmicks Everywhere

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I have to confess: Stupid gimmicks, traps and tricks, and misleading ads drive me crazy. But it seems that right now there are a bunch of them around designed to separate you from your money:

Right now, there is a BC car dealer, and one in Ontario on my Facebook page, advertising that they’ll give you 250 airmiles when you purchase a vehicle from them.

Does anyone know what you’re really getting? The wholesale value of an airmile is about 1 ½ cents! That translates to less than $4 of value. On your end, 250 redeemed airmiles gets you around $30 of gas coupons. Let me see: You’re spending $20 or $30,000 and the extra incentive is $30? Are you kidding me? But I wonder how many people chase the points and think it’s some kind of good deal.

There’s an ad for a pawn shop chain with the claim: We’re another kind of bank. THAT is one big stretch. I know the industry wants to clean itself up, and promote itself away from their current image, but a pawn shop is not a bank – give me a break.

Nationally, and it may just be marketed in the US on television, there is now a huge promotion to buy a 24 karat gold coin. They claim it’s a limited edition $50 value for $9.95. Wow – that sounds like a deal…on the surface, especially with the gold mania that’s gone way beyond reasonable and rational.

However, in the ad they mention that the coin contains 14 mg of pure gold. OK, most people know what an ounce is. But hands up if you know what 14 milligrams are? I didn’t think so. At the current value of gold, that 14 mg is worth 78 cents, because it’s 0.000494 ounces.

The ad goes on to claim that this is an incredible investment. How is that? 78 cents worth of actual gold for ten bucks is an investment? It may be shiny, but it’s not all gold.

But a gold fever is a gold fever, and lots of companies are taking advantage of it. In Boca Rotan Florida you can actually find a vending machine that will sell you gold. Just insert your credit card, make your so-called investment selection and buy it, just like you would out of a candy vending machine.

Gold is the only safe investment says one advertisement. Oh, really? As though investing in good growth mutual funds with a long track record hasn’t historically averaged around 12%?

Tim Horton now has an ad campaign designed to get people to automatically re-load their gift cards through their bank account:” Could I get one of these and one of those and get my friend here whatever he wants.” A pre-loaded gift card is like a credit card. Tim Horton, and everyone else in the small cash purchase industry, knows that you’re likely to spend way more money with a card instead of cash!

With a pre-paid card, or credit card, McDonalds average purchase increases 47%, and vending machine purchase per person increases 178%. Small wonder these companies want you to use anything but cash!

The Panic Shopping Just Before Christmas

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Four more shopping days until Christmas, so you know what that means, right? Any semblance of reasonableness, budgeting, and comparison shopping is done and over with. Now, it’s mostly panic. And retailers know that. Christmas week is not the week for any great deals.

The average person spends $104 when they go to a mall. That has to be way higher when we have a long list of presents still to buy and not a lot of time. I don’t know if it’s too late to get you to your bank machine and draw out the cash for the rest of your shopping. I hope you’ll do it, because we spend about 18% more when we pay by credit card and, this is purely my guess, another 25 to 50% more in panic mode. If you have the cash on the counter, you’ll literally feel the pain of parting with that money and you WILL reduce what you spend.

Of course, part two is the old stand-by of gift cards. For two years, their sales have been pretty stagnant, but this year, sales are way up and will be over $30 billion in North America.

I’m sitting here looking at a $20 bill. I don’t see an expiry date and it doesn’t say anywhere on the bill that I have to use it at a certain store. It’s nice to know that this $20 is good anywhere, and anytime. That’s not the case for gift cards.

I am not a fan of gift cards unless they are at a discount, such as $80 for a $100 gift card or buy one for $25 get another for $5 free. Give the cash with a note of what you’d hoped they’d use it for and not the gift card. Remember that over 8% of gift cards are never used, so that’s $240 million down the drain, and gift cards are no good if the retailer goes out of business.

I’m fine with those from Wal Mart or Tim Horton, Starbucks or Amazon, but the smaller the retailer, the bigger the risk they won’t be around to honour the gift card. They have your cash and you have nothing.

Conversely, if you do get a gift card, use it right away for the full amount. If there’s a balance left, keep it on the fridge and use a felt marker to note what’s left so it doesn’t go to waste, or give it to someone else in line at the check out, if it’s a small amount left.

Five Updates of Previous Stories

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According to Consumer Report, more than 25% of all gift cards we received LAST Christmas still have not been redeemed. That’s over a year ago, and this money is still sitting in a drawer? Yes, it’s real money. Make a point of pulling out all your gift cards and a goal of using them up – sooner – way sooner, rather than later. The last thing you want to do is have them go to waste, or finding out the merchant is no longer in business.

A year ago, a new technology was just taking off called NFC – near field communication. It’s the technology behind the pay at the pump card that’s on your keychain with a number of gas stations. Well, after just a couple of years, it’s now firmly in use with smart phones, because in 2009, its first year in use, over $69 billion was paid using a phones. That amount will jump drastically, as rumour has it that Apple will include that technology in their next i-Phone, and i-Pad, due out in April.

Here is a sad reality of something we’ve talked about in the past: According to a survey by Mint.com, a great on-line budgeting and financial planning site, 72% of couples under age 30 admit that discussing finances always leads to an argument. Even worse, in terms of building a strong and trusting relationship is that 43% keep some of “their” debts a secret from their partner.

We talked about it briefly a week ago, but now there’s proof that renting doesn’t have a negative stigma anymore – at least right now. According to the National Apartment Association, 76% of people believe that renting is preferable to owning a home right now.

Here is a strange story from American Express: According to a study from Amex, last year, wealthy people increased their trips to fast food restaurants by 24%, versus an 8% increase from lower income groups. OK, that makes sense. Even rich people are feeling the pinch. But there’s a second part to the report: These wealthy people increased their spending on cruises and DOUBLED their spending on business-class airline tickets. How do you reconcile that? Save on restaurants, but actually spend more money in the big ticket areas? Does that $10 saving make sense when dropping thousands more in business class airline tickets?

Gift Cards? Did Cash Become a Problem?

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A recent survey by the National Retail Federation found that 57% of us would like to receive a gift card this year. OK, but hands up if you’re also fine with receiving cash.

Last year we bought billions of dollars in gift cards in North America, and 95% of people bought at least one of them. But this year, we’re in a new economic reality and I want to make sure you’re really careful and think twice before buying them.

When you buy a gift card you’re paying the merchant real Canadian money. What you get in return is a piece of plastic or paper that’s nothing more than an I.O.U. That’s all it is, and you gotta hope they’re still in business when you, or the person you gave it to, want to use it.

When the retailer or restaurant goes bankrupt, your gift card is worthless. That’s a huge risk you’re taking. A year ago, who would every have predicted the Bombay Company would go bankrupt, or Circuit City, the parent company of Radio Shack, or Linens ‘N Things, to name just a few really big ones?

Sure, you’re safe with a bunch of retailers from Tim Horton to Wal Mart, but better safe than sorry. This year, give them some real Canadian cash. It doesn’t go bad, has no fees or expiry date and it’s not impersonal – merchants have marketed that and it isn’t true at all. It’s safe and the same thing as a piece of plastic. But the cash is good forever.

Last week I found a $20 bill in the glove box of my car. It was an emergency $20 and had been there for over a year. Because it’s been out of circulation a year, should I send this back to the Bank of Canada and get them to shred it? Are you nuts? Of course not!
Yet, that’s exactly what happens when almost every pre-paid credit card, also called stored-value cards, and gift cards, which don’t get used for a year. They’re either void, deduct a ton of inactivity fees each month, or simply wipe out the whole balance left.
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When it comes to purchasing gift cards, the newest trend, and spreading very quickly, is buying gift cards at a discount. It was started by Costco where you can often purchase a $100 gift card for $80.

If you’ve got any store credit or some gift cards around – use them up. Besides, more than 20% of gift cards, or around $8 billion, are never used! That’s a huge amount of wasted money!

Banks love marketing pre-paid credit cards. They make the same fees and profits as they do on credit cards, but without any of the credit risks. Retailers love them, because they’ve got all your money up front, and you, or the recipient, have no choice but to deal with their business. Retailers also know that most people spend more in their stores than just the value of the gift card and they pay retail prices, without spending a lot of time looking for discounts!

In the coming weeks, millions of people will purchase gift cards and pre-paid credit cards for Christmas presents. But did cash somehow become a problem? Cash doesn’t have an expiry date, you won’t be charged an inactivity fee, and fifty bucks really is fifty bucks!

Prepaid Cards – The Good and the Bad

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Last January, I asked a credit card insider where the growth and focus of their company would be over the next couple of years. Without hesitation, the person told me that it would be in the area of prepaid credit cards.

With recent, and much stronger, consumer and financial legislations, more and more of the emphasis of credit card issuers will be on marketing prepaid reloadable debit or credit cards. For the last few years, we have become used to seeing them marketed as Christmas gift cards, but that will now be year-round.

These cards will be the main tool which banks will use to strengthen their relationship with younger people, and especially students, who cannot obtain a credit card on their own. The bank marketing will also focus on lower-income people, anyone with big credit problems, and those who have no current bank relationship. On the surface, prepaid cards can seem like a good idea, but be careful, because they are heavy on fees, and light on consumer protection.

Prepaid cards do not cover you for the same fraud protection as credit cards. If your card is lost, stolen, or fraudulently used, you are liable for the loss. Each issuer has voluntary guidelines and protections that you’ll need to understand before you get the card, and before something unforeseen happens.

Plus, you are not building, or rebuilding, credit with a prepaid card. You are paying the money up front and receive a plastic card to use up to the amount you have already given them. The issuer is not extending credit to you, so you will not have your activities reported to the credit bureau.

The good news is that provincial legislation, from BC to Ontario at least, now prevents cards from having an expiry date, or a monthly activity fee.

With a wide variety of other fees, here are some of the questions you need to get answered before choosing a card:

Activation fee amount: Most cards charge to get the card set up and activated. The Walmart Money card is one of the cheapest, but others can charge up to $30.

Cash advance fee: All cards will charge you a fee to get a cash advance from an ATM. As a result, you need to commit to never using the card to obtain cash. But do ask, because some have one or two free withdrawals.

Statement fee: All cards will let you check your balance online, but most will charge you for a mailed statement.

Balance inquiry fee: If you can’t wait until you can get online, almost all cards will charge you for a balance inquiry through an ATM. It’ll be their fee plus whatever the ATM provider charges on top of that.

Inactivity fees: The rule of thumb is that these won’t get charged for at least a year or more. If you are frequently using the card, it may not matter as much as someone who only intends to use the card occasionally.

Some Financial Christmas Presents For Yourself

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Ah, the week before Christmas. That means a lot of people should just about be at the stage where any logic, budgeting, or living within our means, goes out the window. It’s normally right about now that lots of us go nuts with our spending. Don’t do it – slow down, go to the bank and get some cash. Paying with $20 bills has a real money feeling, instead of just swiping away with plastic! And your wallet will thank you for it in January.

Presents are not what Christmas is all about, at least for us adults. If you think back, some of the most memorable gifts weren’t the expensive ones. Better yet, can you remember exactly what you got for gifts last year? And it’s certainly not a contest to see who can be the most irresponsible and spend the largest amount of money.

Gift cards: Remember what we talked about last month. Be careful. You’re parting with cash and getting an I.O.U. That merchant has to be in business when the person goes to use the I.O.U. It’s perfectly fine to give cash. There’s no expiry date, no fees, and no limitations. Just put a note in there that your financial advisor (that’d be me you can blame) suggested you care enough not to send a risky gift card.

We talked a couple of times this past year about internet security and hackers getting into people’s bank accounts and on-line transactions. Are you, or do you know, a high net-worth individual that does on-line banking or accesses their brokerage accounts? If so, one of the best presents is a small notebook computer that ONLY gets used for on-line banking. That way, there’s no chance for anyone to hack into it, as it doesn’t get used for anything else on the internet!

Did you know that the Salvation Army just announced that their annual Kettle Drive is now credit card ready? You can just swipe and donate. I’m pretty ambivalent about that. I love people donating to charities and helping others, but I’m not sure it needs to be on 20% credit cards.