Turning a gift card into a thoughtful gift starts with picking out the right card, for the right place, in the right amount. Let me explain:

1. It’s Not About You. Pick a gift card the recipient would want, not one you think he or she should have.
2. Location. Location. Location. Make sure the gift card can be redeemed at a convenient location or website.
3. Buying Power. Be sure the recipient can buy something without spending his or her own money.
4. Avoid the Gotchas. Read the back of the gift card to learn about possible fees and expiration before purchase.
5. Now and Later. Pair the gift card with a little something that can be enjoyed now. The gift card will be enjoyed later.

On their own, I agree. But by adding a little something extra–creating a gift card vignette of sorts–you can make the presentation personal. For example, a music-themed gift card attached to a homespun CD of “songs that remind me of you” plus a note that reads, “You make my heart sing” turns a convenient and practical gift card into a sentimental surprise.

On this site are hundreds of suggestions you can use to turn any gift card into thoughtful gift.

First decide on an amount that works for your budget. Then select a gift card to a place where that amount can be redeemed without additional cash. For example, $15 should cover a trip to the ice cream parlor or a smoothie shop. But it won’t go far at a restaurant with tablecloths. So pick a gift card amount that is comfortable for you and useful to the recipient. And don’t worry about looking cheap. Another benefit to creating a gift card vignette is that the focus shifts from the dollar amount on the card to the overall sentiment.

Pre-gift card, we scraped the price tag off our presents to avoid revealing how much we’d spent. So naturally, it feels a little awkward to point it out now. That’s why I think it’s crucial to pair the gift card with a little something extra. Not only does this method add mystery to the gift (and the total cost of the gift), but shifts the recipient’s focus from the gift card itself to the complete present. Choosing the right dollar amount also helps.

I’m a fan of gift card kiosks for the convenience. I can choose from a range of cards and pick up my gift card “extras” to personalize the gift without leaving the store. (I did most of my Christmas shopping at the grocery this past year saving me time and money!) But the downside to the kiosk is that only large retailers are represented and you can’t choose the amount you want to put on the card. You might have a selection of dollar values ($25, $50, or $100), but you can’t pick up a card to the craft store, for example, and choose to only put $20 on the card. So, if one-stop-shopping is important to you, buy from the kiosk. If flexibility and supporting local merchants is more important to you, then buy from the actual retailer.

I honestly wouldn’t buy a gift card from a business I thought likely to close up shop in the near future. One way to avoid ending up with a useless gift card is to buy from a national retailer. Though not impervious to the effects of the economy, large stores typically warn the public before going out of business, giving gift card holders the opportunity to redeem cards before the doors close for good.

(Disclaimer: I’m not a lawyer. This is my opinion.) Much has been done by stores and gift card makers to reduce opportunities for gift card theft, but obviously it can still happen. What you should know is that Gift card fraud is often an “inside job” that is more likely to occur in a small shop with a limited number of gift cards in inventory. Someone with access to the physical gift cards must capture the card data and then wait for the gift card to be purchased by a customer. When the card is activated, the thief must then redeem the gift card before the recipient does. To avoid gift card fraud, I suggest buying from a store with hundreds of gift cards, making it harder for an insider to poach or have any idea which cards have been activated. And give the activation receipt along with the card. If there is a problem with the gift card, the paper trail will help the store figure out what happened.

(Disclaimer: I’m not a lawyer. This is my opinion.) In 2009, laws went into effect that prohibit gift cards from expiring before 5 years from the date of purchase. Some states enacted stronger laws and those take precedence over federal. Check state laws here to find out what you can expect in your area.

Rebate gift cards, however, do not fall under these laws. For example, if a store offers you a $10 gift card with the purchase of a $25 gift card, the bonus card (or rebate) may only be valid for a specified time period. Read the legal terms on the back of any gift card you buy or receive to avoid problems.

(Disclaimer: I’m not a lawyer. This is my opinion.) In addition to laws prohibiting early expiration, the CARD act of 2009 added restrictions against or removed fees entirely. Again, you should check state laws to know what your rights are. But here are my guidelines for avoiding fees:

• Use the card. Don’t hold onto it forever. In my experience, fees typically only go into effect after the card has gone unused for an extended period of time.
• Read the back of the card. My understanding is that bank issued gift cards such as Visa, Mastercard, and American Express, come with greater flexibility (can be used almost anywhere), but also come with greater restrictions. For example, I’m looking at the back of a 2009 activated American Express gift card that reads, “…a $2 monthly service fee applies but is waived for initial 12 months after purchase.” So that takes me back to the first rule: use the card.

Rebate gift cards do not fall under the CARD act. For example, if a store offers you a $10 gift card with the purchase of a $25 gift card, the bonus card (or rebate) may only be valid for a specified time period.

To avoid problems, read the legal terms on the back of any gift card you buy or receive and ask the store to explain any rebate gift card restrictions before purchase.

I don’t often have this problem. Some gift cards hang around in my wallet longer than others, but rarely do I miss the opportunity to do a little guilt-free shopping. There have, however, been a few exceptions. This is what I recommend you do with unwanted gift cards:

1. Re-gift it. My husband received two gift cards to one of our favorite restaurants from a co-worker. Though grateful for both, two date nights would also necessitate two babysitting gigs. We opted to keep one and give the other to his parents for Christmas, saving us babysitter expenses and reducing our holiday gift budget. I do, however, suggest you check the balance on the gift card before forwarding it to a friend.
2. Spend it.Think about upcoming birthdays, baby showers, weddings and other gift-giving events on your social calendar. Use the gift card to buy a traditional gift for the occassion.
3. Cash it out. There are an increasing number of businesses that will allow you to exchange gift cards for a discounted dollar amounts. After carrying a $20 gift card in my wallet for over three years, I decided to cash it out instead. A week later, I received a check for $15. Read about my experience here.
4. Donate it. At least one of the sites I explored would allow me to donate the gift card instead of receiving cash. You could do that or you could simply mail your unwanted gift card to a charity or shelter in your area. They can use the gift card or cash it out themselves if they can do more good with the money than the gift card.
5. Give it away. Just give it to someone you know will appreciate it–for no good reason. If you’re not going to use it yourself, might as well give it to someone who will. I’ve done this before and it feels pretty good.
6. Switch it. If your unwanted gift card is for a store that sells gift cards to other stores (think gift card kiosk at a grocery store), you can actually buy a new gift card with the one you have. For example, I had a gift card to toy store that I didn’t plan to use for some time. Luckily for me, this particular toy store sells gift cards to restaurants, movies, departments, and so forth. I bought a gift card to a sandwich shop using my toy store gift card. This little trick doesn’t work in every situation, but when it does–bingo.
7. Use some of it. In California, the law requires retailers to cash out gift cards holding less than ten dollars. That’s great for me because I don’t have to overspend a gift card to redeem it’s full value. Check your state’s laws here and you might be able to do the same.

I have a couple of suggestions. First, the low-tech solution is to simply store unused gift cards with your money or debit card, rather than in a separate pocket of your wallet. If you see a gift card often, you’re more likely to use it. A second option is to try a reminder service. I just did a little test run of an iPhone application called Tango Card. Apparently the app will send me a reminder once a quarter, prompting me to use cards that I register. You can read more about my Tango Card experience on my blog.

My kids love getting gift cards and I enjoy taking them shopping with their “own money.” Just be extra cautious in selecting a dollar amount and a destination that works for the child and the parent. Gift cards to kid-friendly eateries, movies, and big box retailers like Target and Walmart are some of our family favorites.

Read more about kids and gift cards in this blog post.

Gift cards provide a valuable teaching opportunity. Kids need to understand that the gift card is for a specific amount and they need to spend within that limit. I also encourage my kids to look for something they really want (and are always bugging me for!) rather than veering off towards something sparkly that catches their attention in the moment. As a result, my kids have made some surprisingly mature choices–clothes instead of toys, a game for the entire family, and sometimes even choosing to save a portion of the gift card for later. They’ve also made some poor choices and later regretted it. But that’s a teaching moment as well. Of course, the shopping trip also gives us a chance to practice math in a real world setting.

Read more about kids and gift cards in this blog post.