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Gift Cards: A Win-Win for Giver and Recipient

Gift card purchases are expected to top $28 billion this year.

Gift cards will be one of the most wished-for and most often given gifts this year, according to the National Retail Federation, which calls gift-cards "a win-win gift for givers and receivers."

They're simple, they're highly portable, easy to buy, easy to wrap, easy to spend. Gift cards are flexible enough to fit into any budget, and your recipient will probably be happier with a gift card than an ugly Christmas sweater or a fruitcake. The gift card allows them to buy something they really want.

More than 80 percent of shoppers will buy at least one gift card this season, and they'll spend an average of $156.86 on gift cards. Total spending on gift cards is expected to reach $28.79 billion, the NRF reports.

With gift-card giving, as with any gift giving, there are things you need to remember:

Know your recipient. If you give a gift card to a store your niece doesn't shop, or a restaurant without a location in your friend's hometown, it will probably go to waste. That's not a good gift. In order to make your gift card useful, make it personal by choosing a retailer your recipient already likes and patronizes.

Buy gift cards on the cheap. There are a number of websites which buy and sell gift cards at discounted prices. CardHub.com, CardWoo.com and PlasticJungle.com are gift-card exchanges, which will purchase your unused gift cards and sell them to customers at savings of up to 35 percent. Your recipient will still get a $50 gift card, but you could pay significantly less than $50 for it, and the recipient will never know you paid less than face value.

Avoid general-purpose gift cards and prepaid cards. Gift cards from Visa, MasterCard, American Express and Discover often have service fees or inactivity fees, and your recipient could see their gift card balance dwindle before they have a chance to spend it. Prepaid cards look like gift cards, and are often associated with a specific retailer, but they're also known for their fees. They're also not really intended to be used as gifts. Stick to retailer-specific gift cards, which don't usually have those fees. Also, thanks to the CARD Act, gift cards can't expire within five years of being issued.

Buy in store to avoid shipping. While some retailers ship gift cards free, some charge shipping fees on gift cards. If you can, get your gift card from the store directly so you don't have to pay extra. You can sometimes find a collection of various gift cards at grocery stores or convenience stores.

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