Gift cards not as no-hassle as once thought

Gift cards have become the easy, no-hassle holiday gift as consumers spent $26.3 billion on them a year ago.

But buyer beware.

In an uncertain economy and with high-profile businesses such as Circuit City seeking bankruptcy protect, those convenient gifts could become worthless pieces of plastic, according to Bill Hardekopf, chief executive officer of LowCards.com and author of "The Credit Card Guidebook."

For instance, when Sharper Image declared bankruptcy and shut its stores earlier this year, the move affected almost $20 million in gift cards, Hardekopf said.

There is no guarantee that consumers will be able to redeem the full value of the gift card if a retailer files bankruptcy, he added. When that happens, the court must approve any gift card programs.

Bankruptcy courts consider unused gift card funds as debt and decide whether the retailer must pay for it, Hardekopf said.

The retailer can ask the court to allow it to continue to honor gift cards. If the retailer doesn't make the request or the court doesn't allow it, then the consumer can lose the value of the gift card. After that, the only remaining option is to file a claim as an unsecured creditor.

While consumer groups have petitioned the Federal Trade Commission for changes and safeguards for gift cards, Hardekopf gives this bit of advice: "The best way to use a gift card is to spend it as soon as you receive it because you don't know what is going to happen in the future."

He also cautions that bankruptcy isn't the only way a card can lose its value. "After six to 12 months, some retailers charge a monthly fee that is as high as $2.50, which will quickly reduce the value of your gift card."

So, if you receive a gift card this holiday season, don't hold on to it. Spend it quickly. You have no way of knowing if the business will be around later when you decide to use it.

Hold everything

Sears is taking a page out of the stay-afloat-in-this-economy playbook directly from corporate sibling Kmart by bringing back layaway two decades after it abandoned the service.

With Kmart officials calling its results "tremendous" after promoting its pay-as-you-go program last month for the first time in years, parent company Sears Holdings Corp. of Hoffman Estates, Ill., took note.

The move comes as shoppers look for ways to save money during what's widely expected to be the worst holiday shopping season in decades.

Sears' layaway program started Sunday in virtually all of its departments except home appliances and electronics. The chain has stores at Citadel Mall and Northwoods Mall.

Layaway has its roots in the Great Depression, but its use dwindled in the past 20 years as consumers turned to credit cards. Wal-Mart Stores Inc. discontinued the practice in 2006, citing falling demand and rising costs. Just a few independent retailers, including Kmart, kept the program, though the discount chain never touted it heavily until this year.

Wonder Works, a specialty toy and gift shop with locations in West Ashley and Mount Pleasant, has offered the service for nearly two decades. "Layaway has been busier than normal," co-owner Christine Osborne said. "I'd say about a third more than normal."

With the national economy worsening, industry experts say other retailers might give the program a second look.

"This is a tool that people are going to use quite heavily this Christmas in those stores that have it available," said George Rosenbaum, chairman of retail consulting firm Leo J. Shapiro & Associates. "And then retailers will see whether this was a great thing they missed and whether they should install it next year."

Sears' revived holiday program is available on everything from clothing and toys to tools and home fitness equipment. Items must be purchased on or before Nov. 22 to meet the contract's billing schedule, and must be picked up no later than Dec. 23.

Gearing up

Half-Moon Outfitters, which has two locations in Mount Pleasant and downtown Charleston, is venturing into new territory and this Wednesday, from 3-7 p.m., will mark the grand opening of its newest shop at 94 Folly Road in South Windermere Shopping Center in West Ashley.

Ten percent of all sales that afternoon will go to the Nature Conservancy and the Coastal Conservation League. Charleston Mayor Joe Riley will cut the ribbon around 6 p.m., and the retailer will offer free food by Evo and Med Bistro, free rock climbing for kids and singing by Hank Futch from the Blue Dogs.

Katherine P. Smith, director of advertising and marketing for Half-Moon Outfitters, said the timing of the opening is not ideal given the state of the economy, but the company did its market research and decided to go forward.

"We are trying to be smart about it," she said.

By design

Charleston's Design District is set to welcome a new addition. SieMatic Kitchen Designs, a high-end kitchen design store, has signed a lease with Patrick Properties for 3,000 square feet next door to Fish. The building is under renovation and should open by January, said Jenny Badman, marketing and public relations manager for Patrick Properties.

A meet-and-greet reception is set from 5:30-6:30 p.m. Wednesday at Fish.

Reach Warren Wise at 937-5524 or wwise@postandcourier.com.