POSTED: Wednesday, December 24, 2008 - 3:25pm

UPDATED: Monday, April 26, 2010 - 1:20am

Experts urge caution when buying gift cards this holiday season

If you plan to buy gift cards this holiday season consumer advocates are sounding severe warnings that are connected to the downturn in the economy.

Shoppers spent an estimated $26 billion on gift cards last year during the holiday season.

In fact, it's the most requested present under the tree according to the National Retail Federation.

But that number is expected to drop this year about six percent because shoppers are more focused on sale merchandise.

"If I’m a gift buyer and have a choice between a $50 sweater on sale 40% off or a %50 gift card not on sale, I might lean more toward the sweater," said Scott Krugman of the National Retail Federation.

The unstable economy causes other concerns.

"There are some places that I would have bought before that this year I’m not going to buy, because I’m not sure if they're going to be around a year from now," said one shopper.

The retail federation says in most cases where there's reorganization under chapter 11 bankruptcy, like with Circuit City, the companies will honor their gift cards.

Something else to be aware of; swindlers who make note of the number on the back of the gift card in the store, check online to see if it had been activated, and then cash in the card on the retailer's website.

Both Walmart and Target acknowledged the problem.

Another, safer option for gift card buyers are those backed by a credit card company that can be used at all stores in a local mall, but those come with a fee.

Lots of choices and ways to buy, gift cards are still holiday favorites.

Another thing to watch out for, some gift cards have a decreasing value as time goes by.

If you have problems with a gift card being honored, you can contact the better business bureau.

For general information on gift cards log on to the national retail federation web page at

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It also makes me happy every time I received unwanted gift cards and I appreciated it so much.

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