Beware the risks of giving gift vouchers

Esther Shaw / 20 November 2015

Expiry dates and shops going bust can make buying gift vouchers and gift cards risky. Read about the pitfalls and avoid getting left out of pocket.

Many people may be planning on giving gift cards or vouchers to family and friends this Christmas, but you need to tread carefully before purchasing one of these pieces of plastic, as they can come with a raft of pitfalls that can leave you out of pocket – and the person you are buying for empty-handed.

What happens if a retailer goes bust?

Gift vouchers can be a convenient way of giving presents – and can be particularly useful if you have a tricky-to-buy-for friend.

But issues can arise if a retailer goes bust, as most vouchers offer little or no protection. 

While it is often smaller firms that go under, in recent years, a string of high-street stores, including HMV, Comet and Jessops, have all gone into administration.

If a retailer does collapse, there is no guarantee you will be able to use your vouchers or get your money back.

If you are lucky, the retailer may honour the vouchers. But in many cases, you are likely to find that the vouchers will no longer be accepted, meaning they are worthless.

What are your rights if a company goes bust?

Check for expiry dates

Another of the downsides of vouchers is the fact they often come with expiry dates. This is especially true with the new plastic cards which are gradually replacing old-style paper vouchers.

The time limit by which vouchers must be used could range from as long as 10 years to as little as just 12 or 24 months with some retailers.

This is all well and good if you note down the date as soon as you receive the vouchers, but if you not, there is a risk they could get lost or forgotten.

If your vouchers have expired, firms are not required to honour them.

Equally, if you have lost your gift card – or had it stolen – you may be able to get your card cancelled and your balance transferred to a new one, but only if you have written down the number or registered the card.

Also note that you may be charged a small fee for this.

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Inactive balance charge

It’s worth noting that some cards come with an “inactive balance charge” after a certain period.

This may mean that you have to use the card every year or so to avoid a charge of up to a £1 a month being deducted. Make sure you check for this.

Penalties for under-spending

In addition, you should be aware that if you don’t use all your vouchers in one transaction, you may not get the full value, as some retailers will not give you a refund if you under-spend.

Say, for example, you have a £20 voucher and use it buy gifts worth £15, you may not get the £5 change.

The best way to get around this is to by buying lots of low-value vouchers rather than one big high-value voucher.

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Opt for a multi-store card

While most vouchers are attached to one particular retailer, there are certain schemes which allow you to spend your money at a variety of retailers.

A multi-store card can make good sense if you are worried about a particular firm going bust, as if one goes under, you can still spend your money elsewhere.

The Post Office One4All card, for example, can be used in more than 22,000 outlets nationwide, and online in selected retail partners. These include Argos, Debenhams, Boots, Currys, Warehouse, Oasis and TK Maxx.

Finally, while the One4All card allows you to spend both online and in a physical store, not all gift cards and vouchers allow you to do so, so make sure you find out what the options are this before purchasing vouchers or gift cards as a present.

For more useful money saving tips, visit our money section.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.