On the surface, gift cards
seem pretty basic: you have a card in a
dollar amount, you use it at the store, right? Well, a recent survey by the
Consumer Federation of America found widespread misunderstanding about gift
cards, especially general purpose cards that can be used anywhere. Only a third
of adults surveyed knew how much the cards cost to buy, and only 54% were aware
that some of these cards actually charge a monthly fee six to 12 months after
they're purchased (these fees vary by state and by card).
If you are giving cards
for gifts, you should ask:
•Are there upfront fees?
If you have a long gift list, fees can add up.
General purpose cards offered by credit card companies often cost $5 to
$10 just to purchase, and can incur monthly fees of $2.50 if the card isn't
used within a year. According to Kelli Grant, Senior Consumer Reporter for Smart
Money, the friendliest option for your recipient is currently American
Express gift cards, with a fee of $7 for the card itself, but Amex recently
discontinued all other monthly fees.
•Are there expiration
dates and inactivity fees? A credit
card reform bill signed into law this year prohibits gift cards from expiring
in less than five years and bars issuers from charging fees if the card is used
in the first 12 months. But, the restrictions won't become effective until
August 2010. So check the cards to see if there are expiration dates. If you
plan to give a general-purpose card that charges fees, make sure they're
clearly disclosed.
•What about a retail card. Retail cards can be a better deal than a
general-purpose card, especially if you know the person you want to buy for
shops at certain retail outlets. Most retailers don't charge a fee for their
gift cards, so you only pay the face amount on the card. Another plus: most
retail cards don't expire or charge inactivity fees.
If you receive a gift card,
it’s good to:
•Use it as soon as
possible. You won't have to worry
about inactivity fees or expiration dates.
And your card cash will go farther if you use it at those great
after-Christmas sales!
•Save the gift card
package and receipt, and if the card has a program that allows you to register
online, do that! That way, you'll be able to replace a lost or
stolen card.
•Know your balance. Keep your receipts to track spending. You may also be able to check your balance
online.
•Let the cashier know ahead
of time that you want to pay with a gift card. If you plan to use a gift card for just part of the
purchase, make sure the cashier knows that, too. The Consumer Federation of
America survey found that seventeen percent of gift cardholders have had
trouble spending the entire balance on their cards because retailers refused to
accept split payments on a purchase that exceeded the card's balance.
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