For many years gift cards were the fastest growing sales channel for retailers and restaurants, but consumers have started to savvy up to the fees and “gotcha’s” associated with gift cards.

Typically, gift cards to retail stores come with inactivity fees and other junk fees. There’s also the possibility that your gift card will be utterly worthless if the restaurant or retail store that the gift card is for shuts down. It’s essentially taking real U.S. money and turning it into an IOU.

As the economy has faltered, gift cards have declined significantly in popularity. Many have shied away from gift cards because of the possibility that the restaurant or retail store that the gift card is for will go out of business.

Retailers have taken notice of the lack of consumer demand for gift cards and have turned their practices around quite a bit after the public outcry about all of the junk fees included with gift cards.

Many retailers are remain desperate to sell gift cards because they know that a certain percentage of gift cards will never be redeemed, which becomes pure profit for the store. As a result, some retailers have begun offering gift cards at a discount. For example, at Costco Wholesale, you can purchase a $100 gift card to Costco for just $80.00.

These discounts that retailers are offering on gift cards can be a great deal if the gift card is used in a timely manner, but when you purchase a gift card in a dollar-for-dollar transaction, it’s rarely ever a deal.