Gift Card & Fees - Why Gift Cards Aren't A Good Present

[jeffrey]

While gift cards continue to grow in popularity, they're far from a gift to your (and the recipient's) pocket book. Although they are an easy alternative for those hard-to-shop-for people on your gift lists, there are far better ways to give money than with a gift card.

There are a number of different types of gift cards, but the one thing that they are all likely to have in common is a variety of fees. These fees will not only cost you for purchasing the card, but also the recipient depending on how the gift card is used. Here are some of the disadvantages and fees that you are likely to run into if you give or receive a gift card.

Gift Card Money Expires: If you are given a gift card, put it in a desk drawer and come across it a couple of years later, it's likely to be worthless. That is because many gift cards expire and once they do, your money disappears. If the gift card does allow a replacement of an expired card, the replacement card will likely carry a fee of $5 to $10.

Monthly Maintenance Fee: There a few states which have implemented laws stating that gift cards can't expire. Even if the gift card doesn't have an expiration date, that doesn't mean waiting will have no effect. Some gift cards charge a monthly maintenance fee if you still have a balance after a certain amount of time. This means that if the recipient doesn't use the gift card quickly, it can become a worthless gift. Anyone who receives a gift card should immediately check to see if the card comes with monthly maintenance fee. If it does, you'll want to use it promptly since the money was meant for you, not the gift card seller.

Shipping & Handling Fees: Many people find that purchasing a gift card online is convenient to order it. This convenience doesn't come cheap. Ordering a gift card online will likely result in a "shipping & handling fee" of anywhere from $5 - $10, more if you're ordering it last minute and it has to arrive in a hurry. If you want to avoid this fee, you need to go to a brick and mortar shop to make the purchase.




Service Fees: If you purchase a gift card by phone or over the Internet, you'll likely be charged a service fee from $4 - $12.

Limits On Use: While store specific gift cards are likely to have less fees that the general use gift cards, they can only be used at the specific store. Also be aware that some gift cards can't be used for Internet shopping further limiting their flexibility.

Out Of Luck If It's Lost Or Stolen: If you lose your gift card or it is stolen, you're most likely out of luck. Unlike credit cards that provide protection, gift cards don't. While some retailers are more lenient with this and will reissue the card if you can provide proof of your most recent purchase, most won't. If you are lucky and you can get the gift card replaced, there's a good chance you'll also be charged a replacement fee of up to $10. A gift card is, in most cases, the same as carrying cash with no protection.

Exchange Gift Card For Cash Fees: If the recipient can't find anything and decides to cash out the card, they will either be out of luck or pay a lot to do so. Many gift cards simply aren't redeemable for cash. Those that will let you redeem your remaining balance usually come with "processing fees" as high as $15.

ATM Fees: Some general use gift cards come with PIN numbers. If it does, you can likely withdraw money from the card at an ATM to get cash. While this is convenient, it certainly is not free. You can expect to pay about $2 per ATM transaction with a gift card if they are allowed.

All in all, gift cards make little financial sense for you or the gift recipient. If you are set on giving a gift card, opt for one from one of the few retailers that don't charge fees: Banana Republic, Barnes and Noble, Borders, J. Crew, Starbucks or The Gap.

[abowers]

I'm not objecting to your article--gift cards should be chosen with care, but just a couple thoughts:

"Out Of Luck If It's Lost Or Stolen: If you lose your gift card or it is stolen, you're most likely out of luck. Unlike credit cards that provide protection, gift cards don't. While some retailers are more lenient with this and will reissue the card if you can provide proof of your most recent purchase, most won't. If you are lucky and you can get the gift card replaced, there's a good chance you'll also be charged a replacement fee of up to $10. A gift card is, in most cases, the same as carrying cash with no protection."


With Starbucks Gift Cards, for example, you can register them online when you receive them to protect the balance. If lost or stolen, you can "freeze" that gift card, and they will send you a replacement.

"Exchange Gift Card For Cash Fees: If the recipient can't find anything and decides to cash out the card, they will either be out of luck or pay a lot to do so. Many gift cards simply aren't redeemable for cash. Those that will let you redeem your remaining balance usually come with "processing fees" as high as $15."

Mall gift certificates are like cash, and i.e. if you have a $40 mall gift certificate, and only use $17 of it, you will get $23 back in cash. This has been true of gift certificates I've had at 4 different malls, in different states.

[gakline]

I don't like GCs at all. I think they're too impersonable. It use to be that cash was the way out and impersonable, but I think GCs are worse. I mean, you can usually only use them at one place. Cash works anywhere.

I prefer a check to cash and GCs. It has your name on it, they'll remember you longer and they have to do more work too. You physically have to cash it. Then again, most people I'd write checks to have brick and mortar banks. Just my two cents.

[baking23]

I've always had full use of my gift cards, however my brother used to tuck them in a drawer and never use them again. We used to buy them off him and use them ourselves.

I just got a $100 gift card from work, use anywhere but for gas, hotel rooms, and I love it. I've been using it for groceries, movies, food, and it's been great! I want to see how long I can stretch it, but OTOH it's buring a hole in my pocket. I don't think it'll make it to the year expiration date.

[debtconsole]

I prefer a check to cash and GCs. It has your name on it, they'll remember you longer and they have to do more work too. You physically have to cash it. Then again, most people I'd write checks to have brick and mortar banks. Just my two cents.

[ShawnaC123]

I like getting gift cards better than cash...if I get a check then I have to spend it on something responsible or save it. If I get a gift card, I have no choice but to go shopping!

[mom-from-missouri]

It depends where you live.

In Missouri, gift cards can NOT expire for at least 5 years--state law. Hopefully anyone with a misplaced or forgotten card would find it by then.

Its not good to regift gift cards, as you may be passing on one about to expire.

Another state (I forgot who) was mentioned on the radio a few weeks ago that they don't expire at all.


Fact sheet on state gift card protection laws

I keep my gift cards in my coupon book. That way I always know where they are.

[disneysteve]

Originally Posted by mom-from-missouri

It depends where you live.

In Missouri, gift cards can NOT expire for at least 5 years

This is a very, very old thread. Gift cards no longer expire anywhere in the US. It is federal law.

[mom-from-missouri]

The way I read it, they have to meet certain rules or they can still expire??

My mother in law had bed bath and beyond refuse one last fall for $25 because she had "reloaded" it. She called the corp office and they stated the store was correct, but they mailed her a $25 card for customer satisfaction.


New Federal Gift Card Law Enacted






The Credit Card Act of 2009 was passed on May 22, which provides federal regulations for gift cards. The law specifically regulates general use prepaid cards, gift certificates and store gift cards. The law excludes: (a) cards that are re-loadable and not marketed or labeled as a “gift card” or “gift certificate”, (b) loyalty awards or promotional gift cards (which is yet to be defined by the Federal Reserve), (c) cards not marketed to the general public, and (d) cards issued in paper form only. The law prohibits expiration dates on gift cards that are less than five (5) years from the date on which the gift card was issued or the funds were last loaded to the card. The law requires the terms of expiration to be clearly and conspicuously stated.

The law permits dormancy, inactivity and service fees on gift cards only if

(a) there has been no activity on the card in the 12 month period prior to which the charge is imposed,

(b) not more than one (1) fee is charged in any month, and

(c) disclosure requirements are met.

The disclosure requirements are that the card must clearly and conspicuously state that a fee may be charged, the amount of such fee, how often the fee may be charged and that the fee will be charged for inactivity. Notably, the fee must be disclosed to consumers before the card is purchased, regardless of whether the card is purchased in person, over the Internet or by telephone.

The law will become effective 15 months after it is signed by the President. The law does not preempt state laws that are more restrictive than this law.