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The Honolulu Advertiser
Posted on: Saturday, May 31, 2008

Gift cards a can't-miss present for new graduates

By Dana Knight
Indianapolis Star

Hawaii news photo - The Honolulu Advertiser

Gift cards allow folks "to buy what they want when they want," says Macy's spokeswoman Heather Hannan. Consumers agree: 32 percent of people buying graduation gifts this year will opt for gift cards.

ADVERTISER LIBRARY PHOTO | December 2007

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Hawaii news photo - The Honolulu Advertiser
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More personal than cash or checks and not too specific for those young adults who have their own tastes, the gift card is making its way to the top of graduates' gift wish lists.

When American consumers spend more than $4.5 billion on graduation gifts this year, nearly 32 percent of them will be buying gift cards, the National Retail Federation predicts. That's up from 31 percent in 2007.

In terms of actual gifts, only cash — the perennial favorite — will beat out gift cards. More than 58.8 percent of consumers will give cash. (About 35 percent plan to give actual traditional graduation cards.)

Maria Hensley of Indianapolis has two nieces graduating from college and believes gift cards are the way to go.

"I know my limits when it comes to picking out the right gift for anyone so hip, young and cool compared to me," she said.

Hensley will buy cards from electronics, apparel and discount stores and display them in flower arrangements for her nieces.

"I can't lose," she said.

That seems to be the appeal of gift cards, especially when it comes to teens and young adults. Let them choose what gift they really want — and perhaps sneak in a lesson in finance.

"When kids go to college, this is a great thing to buy. It helps them learn how to budget money rather than giving them a credit card," said Billie Scott, spokeswoman for Simon Property Group.

The mall giant markets its gift cards heavily. Call any mall and the receptionist might answer: "Home of the Simon gift card." And this time of year, Simon records major gift-card sales, second only to the Christmas season.

Unlike store-specific cards, the Simon card is a Visa debit card. Preloaded with a pool of cash, it can be used at any store that accepts Visa.

Scott said teens and young adults learn to budget with the Simon card because, unlike a credit card that can be racked up without limits, when the gift card runs out, it's out.

"Money is a very common thing to give," said Scott. "People prefer to give a gift card. It seems a little more personal than giving that cold hard cash or writing a check."

Retailers, from electronics to apparel to department stores, are cashing in on this trend during graduation season.

Consumer advocates advise checking the fine print to make sure the gift cards don't have hidden fees. Some cards have expiration dates. A year from the purchase date, others begin having fees deducted month by month. These fees are more common in mall-issued or bank-issued cards.

Typically, a gift buyer spends more on a gift card than he or she would when buying a gift outright, according to the federation.

Saks Fifth Avenue sees a "definite increase in gift-card purchases" during the graduation season, said Garry Navarre, general manager for the Indianapolis Saks store.

"Young adults just leaving college are often looking to build their wardrobes and especially looking for the all-important interview outfit," he said.

At Macy's, the graduation gift-card trend also is gaining steam.

"It allows them to buy what they want when they want," said spokeswoman Heather Hannan. "Teenagers may have changing tastes, and those making the gift purchase may not know or understand what that is."

Ann Vail, whose son will graduate from Greenfield (Ind.) Central High School this weekend, is a shopper who likes to give practical gifts. Often, that is a laundry basket with a towel set in the colors of the university the graduate will attend, plus detergent and quarters for the machines.

But she has also given gift cards to graduates.

"I sense that most young people prefer to receive gifts they can use to help purchase their top priority items for the next phase of their lives," she said.