Gift card use rises in second quarter

Thanks to their efficiency and practicality, gift cards and pre-paid charge cards are common purchases among some consumers. And according to a recent study from the payment processing firm First Data, they were bought and redeemed at a swift pace in the second quarter.

First Data states between April and June, volume growth for gift card activations, redemptions and reloads grew in each category, likely spurred by holidays and special occasions like Mother's Day, Father's Day and graduations.

However, the pace of growth was slower than the first quarter, which may be due to the downturn in the economy.

"We continued to see positive dollar volume growth of activations, redemptions and reloads throughout the second quarter," said Silvio Tavares, senior vice president and division manager of First Data. "While the economy's effect on consumer spending has impacted gift cards, they remain a popular payment choice among consumers."

The most significant jump in activations, redemptions and reloads came in June, when they jumped 13.7, 15 and 27.5 percent, respectively, in year-over-year growth.

While these cards are used like a credit card, they sport a pre-paid credit limit and must be re-loaded once that limit is reached. Some consumers find such cards convenient, as they aren't reported to credit bureaus, do not impact credit scores, and can be easily acquired by those with poor credit scores.