Bad gift cards equal a bad holiday

Circuit City is the latest national chain to file for bankruptcy. The consumer electronics giant remains open and some shoppers on Monday tried to pick up a bargain or two.

"It is a good thing for us. Maybe we can get a deal. Any chance we get we are looking for a bargain," said shopper, George Glandian.

That works if you can take delivery right away. But holiday shoppers who like the ease and flexibility of purchasing gift cards for friends or relatives maybe in for a surprise.

With so many chains going out of business there is no guarantee the store will still be open when the recipient is ready to redeem the card.

"Companies rarely put aside money to payoff gift cards in case their business fails. So gift card holders have to stand in line in bankruptcy court behind lots of other creditors," said Kim Kleman, Consumer Reports.

In just the past few months, Mervyn's announced it was closing. Linen and Things, Sharper Image, Shoe Pavillion, and several major furniture chains also announced they were closing.

Tujunga resident Don Pickering says he is not worried. He likes gift certificates, but only from his favorite restaurants.

"I do not buy gift cards often. They do not seemed to be appreciated like a gift," said Pickering.

People who have filed in bankruptcy court to redeem their cards found that they were lucky if they got 25 cents on the dollar for the gift certificates. It is a risk many consumers are trying to avoid this year.

"I try to lean away from those. If all else fails though I just go for it," said shopper, Tamar Bezjian.

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