Gift cards have become so commonplace that no retailer worthy of the name can forgo them. I was in a local paint store this weekend -- not a national chain -- that advertised a gift card under the slogan "Paint . the gift that lasts forever." They may be right, but who would want to give paint as a gift?
Whether they're called gift cards or shopping cards, the idea remains the same. You give retailers your money. They have the privilege of holding on to it until you decide to spend it, and you can spend it only at their store. Gift cards work well for consumers who want to give something that looks like a gift, and they're a blessing for retailers, who earn interest on the free float.
So why -- in those states where it's still legal -- do some retailers continue to charge fees for the right to hold your money? This seems like a clear indication of how some retailers regard their customers. Why don't they just put it clearly on the back of the card? I recommend something like "In states that haven't yet banned us from ripping you off, we reserve the right to do so."
I took a detour while shopping this weekend to study the terms on the back of my favorite retailers' gift cards. Not surprisingly, the leading companies get it right. Wal-Mart
In contrast, CVS
The grand prize has to go to regional mall operator Simon Property Group
Most consumers probably aren't terribly inconvenienced by these fees, since the majority of cards are used quickly. My point is that retailing is a survival-of-the-fittest business these days. In my opinion, the most successful retailers for the future will likely be the ones who regard their customers as kings and queens, instead of inconveniences.
Infatuated with plastic money? Check out these Foolish Takes:
- Dayana thinks reward cards are boring.
- McDonald's is playing cards.
- Turn those gift cards into cash.
Give yourself the gift of a powerful portfolio with Motley Fool Stock Advisor. Every month, Tom and David Gardner point you toward the companies that get it right. Try a risk-free subscription today.
Fool contributor Timothy M. Otte has an extensive collection of expired gift cards. He welcomes comments on his articles and owns shares of Wal-Mart. The Fool has a disclosure policy.