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Gift cards can make the ultimate digital holiday present.
Also known as mobile, electronic or e-gift cards, the virtual incarnation of these popular presents can now be sent via text and used instantly. You also can store them in a digital wallet, personalize them to make one-of-a-kind gifts, and even buy them at a discount or using rewards points.
Just as with traditional gift cards, consumers can find e-gift cards for purchases at specific retailers and restaurants or general-use cards bearing traditional card-network brands, such as Visa and Mastercard.
Network gift cards usually carry a purchase fee, often between $3 to $8, depending on the brand and the issuer. With store- or restaurant-specific e-gift cards, there is typically no purchase fee.
The popularity of digital gift cards is on the rise. The number of e-gift cards purchased annually per consumer surged to an average of 6.1 this year, after remaining at approximately 4 in the last three years, according to a 2017 First Data study .
The same study also found that, among all consumers who were aware of mobile gift cards, 52 percent had used one, and that 65 percent of all millennials have used a mobile app to purchase a gift card.
And there are plenty of choices. In 2016, 72 percent of the 200 largest merchants offered e-gift cards, according to a survey by Shelley Hunter, Gift Card Girlfriend blogger and spokeswoman for the Blackhawk Network.
Considering e-gift cards this holiday season? Here's what you need to keep in mind:
Seven things to keep in mind about e-gift cards
1. They're instantaneous.
E-gift cards offer something that traditional gift cards don't: immediacy.
"People tend to think of them as a digital version of what we already have," says Hunter, "But they're an opportunity to connect differently."
Your college student aces a big test. You want to reward her with movie tickets or a trip to Starbucks on the spot. Enter the e-gift card. You can send it wherever you are, and she can receive it in the moment.
2. Some might face restrictions.
While it's rare, some online stores won't accept digital gift cards (or traditional gift cards), or they may place restrictions on their use, says Joe Ridout, consumer services manager for Consumer Action .
Some merchants block e-gift cards (and gift cards) for recurring charges because cards likely will run out after a few payments, says Hunter. And issuers of network-branded cards often block their use at online merchants where consumers could convert the gift into cash - like PayPal .
Additionally, some digital cards can't be used in brick-and-mortar stores. For instance, Visa e-gift cards can be used only online or via phone. Likewise, digital gift cards from Dick's Sporting Goods are for online shopping only.
Another point to investigate before you buy: Refund policies. Some sites don't offer returns on digital gift cards.
So, it's smart to check exactly where and how the card can be used - and if it can be returned - before you click "buy."
Pro tip: Many restaurants and retailers offer digital gift cards, along with rewards and freebies, through their apps. (Two examples: Steak 'n Shake and Pinkberry.)
With places you frequent, "I recommend checking to see if there's a branded app" that offers e-gift cards, says Lindsay Sakraida, director of content marketing for DealNews .
3. You can buy them at third-party marketplaces.
Sites that deal in traditional gift cards sell digital gift cards, too. Think of them as gift-card malls: You'll have options from a lot of different retailers, not just one. A few sites experts use to buy discounted cards include Raise , GiftCardGranny , CardPool and GiftCards.com .
"I'm finding more deals are available at third-party [sites]," says Hunter. "They're more often going to offer you a discount."
At the same time, marketplaces where individuals come together to buy and sell digital and traditional gift cards are not immune to criminals. And some of the sites "have proven very susceptible both to hacking and to fraud," says Ridout.
His advice: If you're dealing directly with individuals (instead of trusted companies), "go there to sell, not to buy."
Sakraida's take is a little more liberal: She looks for sites that offer easily accessible customer service and a money-back guarantee for sales brokered through the site. Raise, GiftCardGranny and CardPool all offer consumer protection.
Regardless, "the biggest recommendation I can make is to redeem gift cards [digital or traditional] as quickly as possible after purchase," says Sakraida.
"People tend to think of [e-gift cards] as a digital version of what we already have. But they're an opportunity to connect differently."
4. You may buy them at a discount using rewards points.
Stephanie Nelson, author of "Greatest Secrets of the Coupon Mom," uses rewards points from her Discover it cash back card - which sells retailer e-gift cards to cardholders at a 20 percent discount on its website.
And some other card issuers and frequent-flyer programs do the same, such as Chase (through its Ultimate Rewards portal) and American Airlines AAdvantage.
One reason Nelson likes it: "There's no administration fee and no expiration" for the cards, she says.
Available for stores, restaurants and drugstores, Nelson uses digital gift cards for gifts - and to get an automatic discount on her own shopping.
Her favorite cost-slashing buy: a Land's End Black Friday sale in which her favorite towels were 50 percent off and she paid for them with e-gift cards that she purchased for 20 percent off.
5. E-gift cards + e-rebates = even more savings.
You also can use rebate sites and apps, such as Ebates and Ibotta, to get additional cash back on what you spend. And with Ibotta, you can elect to receive your savings in digital gift cards.
One frequent-flyer app, United Airline's MileagePlus X , eliminates the steps in the middle - and you can earn United miles on every purchase. When you use it to buy something in-store, before checking out you use the app to purchase digital gift cards for the amount you're spending. Then, when you check out, you pay with those e-gift cards.
You have to, however, be a member of United's MileagePlus program . And if you also use a Chase United MileagePlus Explorer card with the app, you'll earn an extra 25 percent miles bonus on every purchase.
The tradeoff for buying with gift cards: When you pay with a gift card instead of a credit card, you often forfeit the protections that your credit card confers - things like chargeback protection, warranties or extended warranties, and price matching, says Ridout. "That's a very big deal if you're buying an expensive item."
Pro tip: "I always take a [screen shot] of every [e-]gift card," says Hunter. Not only does it allow you to find it faster at the register - but you won't be dependent on working Wi-Fi or digital service.
6. You can personalize them.
With e-gift cards, "there's lots of personalization," Hunter says.
Many sites, (such as Amazon, Sephora and GiftCards.com), let you customize your gift. Depending on the site, you may be able to add a photo, choose a design and select a delivery date.
If your goal is to truly personalize the card itself, you probably want to buy directly from the retailer, she says. Often, those are the venues that will allow the most personalization.
Retailer sites are also more likely to offer buy-one-get-one deals on e-gift cards, says Hunter.
7. You can carry them on your phone.
Looking for an easy, free way to keep e-gift cards front and center in your wallet? Try a digital wallet, such as Android Pay, Apple Pay or Samsung Pay.
"I've used a number of apps," says Hunter. But, these days, she adds, "I suggest everyone put every gift card into a mobile wallet."
See related:Discounts: 8 ways to get gift cards for less , 9 tips for using mobile gifts cards safely