The most popular gift is also one of the worst

If an annual holiday trend holds true, there's a 50-50 chance you'll buy one of most popular gifts sold this time of year -- a gift card. Unfortunately, it will not be a winner.

Don't get me wrong, gift cards can be the perfect solution. But this practical plastic rings up billions of dollars in profits for retailers and restaurants when the cards go unredeemed. Just check out some of the numbers being thrown around this year: estimated gift card sales are$ 28.8 billion. The value of cards that will not be redeemed: $2 billion left on the table. By some estimates, the number will be more than three times that amount. The average American household is said to be sitting on $300 worth of unused gift cards right now.

On the bright side, thanks to better consumer protection laws, many of those cards are still valid and most if not all of the money is still there. New regulations have eliminated many fees, so you can't be charged if you don't use the card in the first year. But here's the catch, the gift card value can still be eaten up in activation fees and dormancy charges depending on what type of gift card you're dealing with.

To avoid getting caught in the gift card trap, remember three key factors. Retail gift cards are the best value because they have the lowest fees. All purpose cards, the ones offered by banks and credit card companies, are the worst value, they have the highest fees, and if you buy a gift card from a company that goes out of business later, you're out of luck, that card is worthless.

Before you decide to give a gift card, make sure it's something your friend or family member really wants. And then, remind them to use it right away. Otherwise, you're better off giving an actual gift with a gift receipt so they'll have something to show for your money.

There are other points to remember, too. By law in this state, retail gift cards cannot expire unless they're part of a promotional giveaway, or charity fundraiser. Also by law here, you're entitled to cash back if the balance drops below $5.

And for gift cards you won't use, consider selling them. There are at least a dozen websites that offer cash or gift card swaps -- minus a fee. Just keep in mind you have to mail in the gift card, so it's important to do your homework. Compare the different websites, their policies and the prices they'll offer you and be sure to check for customer complaints and reviews.

The links below can help you get started but should not be taken as an endorsement: