Gift cards will be the most-popular choice among holiday consumers this year, according to American Express' ( AXP) Spending and Saving Tracker. Fifty-eight percent of people surveyed by American Express said they planned to buy them this year. Overall, 19% of consumers will devote most of their holiday budget to gift cards this season. Not just any card will do. Sanj Raj, chief executive officer of the gift card auction site DFWbid.com, says his site has lost money on gift cards for Nintendo Wiis and Apple ( AAPL) iPods. Consumers are sticking to pragmatic offerings from Wal-Mart ( WMT) and Target ( TGT), among others. "We have moms, dads, grandparents and college kids using our site," Raj says. "The economy during the last couple of years has pushed these people to be more financially wary of what they buy."
Even the most sensible cards can have drawbacks. The NRF said 13% of people who refuse to buy gift cards worry about expiration dates and other fees, while 5.3% fear the recipient would lose it or never use it. Many retailers nixed expiration dates and monthly inactivity fees after new rules from the Federal Reserve Board limited fees and restrictions. However, those policies could force many retailers to scale back refillable gift cards and force banks and credit card companies to add or increase purchase fees on their gift cards. "I bought three Best Buy ( BBY) gift cards for my children and the benefit to Best Buy is that it can only be used in one place," says Rick Fischer, financial services partner at Washington D.C.-based firm Morrison & Foerster and Washington counsel for Visa ( V). "People who give gift cards in the future may have to make a decision between retailers because they can't just give a gift card that is accepted where MasterCard ( MA) is accepted." Until that's hashed out, here are the five best gift cards for the difficult-to-please or nominally important people in your life: >> See the five best gift cards.
M) and Gap ( GPS) may let you use their cards at more locations, and Best Buy and Sears ( SHLD) will let you use theirs online, but Costco's Cash Card gives consumers two things the others don't: bulk products and gas. No matter how much the Fed would like folks to believe we're out of the recession and that last year's record gas prices were an aberration, there's still heavy emphasis on frugality this holiday season. While you have to become a Costco member to reap the benefits once your card is exhausted, a breadth of products including groceries, electronics, books, furniture, gas and even funeral items gives their card more value and variety than their competitors'.
Best charity gift card: TisBest Philanthropy