Gift cards can be a good thing for shoppers who aren’t sure what to get someone, but a study by Iowa State shows those cards can lead to some bad shopping habits for recipients. I.S.U. assistant marketing professor, Laura Smarandescu, says people have more of a connection to what they are spending when buying something with cash.

She says people are more likely to violate their budgets and end up spending more with gift cards than with equivalent cash gifts. Smarandescu says people see the gift card as something extra. Smarandescu says gift cards allow people to indulge, and they have “waste aversion”, where they don’t want to leave money on the card and waste it. And she says they often see the gift card like a coupon and use it to make a more expensive purchase. For instance, if you get a $50 gift card, you might see it as half off a $100 item and buy the more expensive item than you normally would purchase. Smarandescu says businesses like the benefits of gift cards.

She says a lot of people will delay using gift cards and they will expire and they never use the cards. And she says the cards cause people to spend more and become mechanism for people to become more impulsive about spending. Smarandescu says you can avoid the bad side of gift cards by including them in your plan.

Smarandescu says it’s always a good idea to have a budget when you go to the score and especially with gift cards so you have a “more rational mind” when using the cards. This will keep you from overspending. State Treasurer Michael Fitzgerald also has these tips for those who receive gift cards: Read the fine print to check the disclosures for expiration dates or fees that can reduce the value of the gift card.; Understand the retailer’s policy for replacing a lost or stolen gift card.; Use the gift card promptly.; Keep the original receipt if it was included with the gift card.

Fitzgerald says new gift card protections passed by congress earlier this year will go into effect in 2010. The new rules will prohibit fees on gift cards for one year and expiration dates of less than five years from the date of purchase.

You can now buy just about anything you can find in a store on-line, but an Iowa State University researcher says it’s still not clear how internet shopping impacts the holiday sales. Economist Meghan O’Brien says it’s hard to nail down the numbers. She says there is some data available, but she says researchers haven’t quite caught up with on-line shopping.

O’Brien says every year people spend more and more money on the internet, however in the aggregate on-line sales declined, but sales declined across the board. She says on-line sales did decline at a lower rate than sales at “brick and mortar” stores. O’Brien says the internet can serve as a research tool as well as a place to buy.

O’Brien says the internet and on-line retailers allow people to shop prices and find the best deals, so the retailers that have a brick and mortar presence along with a well managed internet site, are in the best position to capture sales on-line and in their stores. O’Brien says the down economy has people looking to big discounters for the best deals and those big discounters have the best resources to maintain and advertise their internet site.

She says it’s a “catch-22″ for smaller retailers as they need the internet to stay competitive — but because they are smaller — they have less ability to use the internet to be competitive. O’Brien says it plays back into the hands of the big discounters like Super Target, Super Walmart, Best Buy and Amazon, because they are most able to effectively use the internet to promote business. But O’Brien says internet sales aren’t going to help a smaller retailer close the gap with the big discounters.

“I don’t know that internet sales could save a lot of smaller retailers, but for smaller retailers that have a niche product, I think it could be very advantageous,” O’Brien says. She says for example, a specialty craft store could benefit by having their products more widely available on the internet.