Gift Cards – An Unexpected Pitfall – Bankruptcy!

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By Consumers Union on Wednesday, March 12th, 2008

The bankruptcy filing of Sharper Image raises questions beyond where you can get a Human Touch Zero-Gravity Massage Chair. Namely, if you have a Sharper Image gift card – or a gift card for any other retailer facing financial troubles – can you still use it?

The bankruptcy filing of Sharper Image raises questions beyond where you can get a Human Touch Zero-Gravity Massage Chair. Namely, if you have a Sharper Image gift card – or a gift card for any other retailer facing financial troubles – can you still use it?

The short answer; it depends. Even if the stores remain open, you might be shut out from using your gift cards depending on whether the bankruptcy court approves the continued acceptance of the cards. It hinges on whether your state is one of the few with a law defining the value of the gift card as belonging to you, not to the bankrupt retailer.

The Consumer Reports Money Blog describes the choices for consumers affected by the Sharper Image bankruptcy. As the economy tightens, we may see other retailers entering bankruptcy.

Some quick tips to avoid bankruptcy blues: Spend your retailer-issued gift cards now so you don’t face the risk of losing any of their value if issuing company goes into bankruptcy. If you are holding bank-issued gift cards, there is a different risk in keeping them for a long time – value disappearing through fees.

Here’s more about the ins and outs of gift cards.

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