Your Gift Card Could Be Worthless

As a followup to my rant a few years back about gift cards, looks like there's another caveat of giving gift cards: they may be worthless if the issuing store goes bankrupt even if they don't cease operations.

Last week, The Sharper Image stopped honoring valid gift cards for purchases at their stores or web site while they are in bankruptcy. Even though laws in several states protect gift card balances from expiring, they don't protect holders from this situation.

The initial fear of the gift cards being worthless has since been eased, but barely. The store is now honoring the cards if the entire printed value is used in a single purchase and the purchase must be over twice the value of the card. If you have a partially used card, it's worthless.

With the downturn of the economy, we're likely to see more of this in the near future (already happened to CompUSA cards in December). So, if you have some gift cards, go use them ASAP. Then start giving cash as gifts instead. Cash wouldn't have fallen to this scam.