Get the most out of that gift card

The National Retail Federation estimates that more than 80% of shoppers will be including gift cards inside greeting cards this holiday season. Giving or getting debit cards requires some care.

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Spoiler alert: There's a really good chance you'll get a gift card for Christmas.

That's not a news flash from the North Pole. It comes instead from the National Retail Federation, which estimated in a recent report that more than 80% of shoppers will be including the plastic gift cards inside greeting cards this holiday season.

The average person will spend about $163 on gift cards, the group's survey found. That's up 4% from last year and represents the highest average amount since the retail association began tracking such things 11 years ago.

Total spending on gift cards this season will reach about $30 billion, the group said.

Matthew Shay, president of the National Retail Federation, called gift cards "the perfect foolproof option for friends and family."

Harry Friedman, a Culver City retail industry consultant, didn't dispute that assessment, but he said this isn't exactly the best reflection of Americans' thoughtfulness toward others.

"Could we be any more disengaged?" he said. "Gift cards save us the trouble of actually having to think about other people and what they want and what they care about."

Be that as it may, I'm here to play Santa's elf by passing along a few things to keep in mind when it comes to these convenient and ubiquitous holiday goodies. First off, Californians have a big advantage over people in a number of other states. That's because our gift cards don't come with a ticking clock.

In some states, retailers are allowed to place an expiration date on gift cards. Or they might attach service fees for using them or even a so-called dormancy fee if you don't use them.

Since 2004, these practices have been prohibited in the Golden State, unless a card can be used to buy goods or services from multiple businesses or if its value is less than $5.

Nationwide, new rules for the gift-card road were laid down in 2009 by the Credit Card Accountability, Responsibility and Disclosure Act. They require consumers to use a gift card at least once a year to avoid service, dormancy and inactivity fees. They also limit retailers to one such fee per month.

Expiration dates are still allowed by the federal law, but only after at least five years.

Department store gift cards will be the most commonly received this Christmas, according to the National Retail Federation. About 40% of card givers will take this well-traveled path.

Other favorite picks, the group found, are restaurants, electronics stores, online merchants and gas stations — because nothing says "joy to the world" like some free gas.

Be careful if you're thinking about giving a prepaid debit card as a gift. They may be handy, but they also can come with a variety of fees.

For example, MoneyGram's AccountNow Prepaid Visa debit card has a $9.95 monthly fee, a $4.95 activation fee, a $2.50 charge each time you withdraw money from an ATM and an additional $1 fee each time you need to check your balance, according to a recent study by BankRate.com.

On the other hand, the American Express Prepaid card comes with no monthly fees, no activation fee and one free ATM withdrawal per month. It pays to shop around.

"You might buy a prepaid card that's worth $40, but with all the fees, it could end up being worth just $30," said Bob Phibbs, a New York retail consultant.

The National Retail Federation estimates that about 60% of consumers are happy to receive gift cards. But if you're among the disgruntled 40%, don't sweat it.

There are online marketplaces where people can buy and sell unwanted gift cards. Sites such as Gift Card Granny and CardCash will allow you to convert a card into ready money — often about 75% of the card's face value.

A site called Raise.com lets you set your own asking price. It requires only that the card have a minimum value of $20. Raise.com gets a 15% cut of the sale.

And a quick word about scams: Watch out.

There have been reports of scammers going to the racks of gift cards in stores and writing down the various card codes.

Then they check to see whether the card has been activated by going to websites such as GiftCards.com. Once a card is up and running, the scammers use the code number to buy merchandise online.

Always take a close look before buying to see whether a gift card has been fiddled with, such as a loose or scratched sticker or coating over the card code.

And if you do get a gift card for Christmas, use it. About $1 billion in gift-card value goes unused each year, according to the consulting firm CEB TowerGroup.

A gift card that gathers dust in a drawer is free money for a retailer. In such cases, the ho-ho-ho is on you.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.

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