Sales of Store Gift Cards Fall While General Purpose Gift Card Sales Rise

Research for the 2009-2010 Holiday season indicates that that consumer spending on store gift cards is projected to fall by approximately 7% as compared with previous years. While sales of store-specific prepaid gift cards are expected to decline, sales of general purpose cards are expected to rise by 3% over the sales figures for general purpose cards during the 2008 season.Store gift cards include cards specific to one retail stores. Restaurant gift cards are also considered to be store gift cards. The defining characteristic of a retail or store gift card is that it can only be used to buy the brand / store items that it was purchased for.

General purpose gift cards, on the other hand, are sold by major credit card companies including Visa, MasterCard and American Express. These general purpose gift cards can be used anywhere where credit cards are accepted.

The waning popularity of retail cards may be based on a number of possible factors. An uncertain economy has driven many stores to order lower-than-normal inventories, so consumers may be afraid that desired items will be out-of-stock after the Holidays when it comes time to use that gift card.

Furthermore, if a retailer goes out of business, Consumers may be left holding a worthless retail store card. This happened to millions of consumers when Sharper Image and Linens and Things went out of business, resulting in a loss of approximately $100 million dollars to consumers. While Title IV of the Credit Card Accountability and Responsibility and Disclosure Act will put an end to this risk, it will likely not go into effect until at least 2010.

These factors coupled with the fact that people may be more prone to practical purchases in a tough economy, are leading some to read for the general purpose cards and leave the retail cards on the shelf.

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