Beware of Gift Card Fees
Not everyone enjoys shopping – the crowds, the time it takes to check out and the hassle of trying to find the perfect gift for a variety of people with differing tastes. That’s why gift cards are so convenient.
There are two types of gift cards. The first is the retail gift card, which is sold by merchants such as restaurants and retail stores. You can only use a retail card at those specific stores or restaurants. The second is a bank card branded by Visa, MasterCard or another credit card network. These cards can be used at any place that accepts Visa or MasterCard.
Both types of cards can make nice gifts but before you choose to purchase them you should make yourself aware of the variety of fees that may be associated with the cards. Some experts estimate that there could be up to 50 different types of fees depending on the sort of gift card that you purchase, even after the Credit Card Accountability, Responsibility and Disclosure Act (CARD) laws made it more difficult to charge fees. There may be fees for each time the balance is checked on the card, when a transaction is made, and maybe even a fee for contacting customer service if there is a problem with the card.
Avoid these fees by reading the fine print, as a matter of fact, read the whole contract. Check out the terms and conditions; there could be fees for activating the card, maintenance fees and fees for not using the card within a specific timeframe. If you are buying online ask about shipping and handling fees. Also be wary of who you are doing business with online because there are counterfeit cards on the market.
Even though the CARD act has suppressed many of the exorbitant fees associated with gift cards, not all gift cards are protected by the law. Gift certificates, reloadable cards and prepaid phone cards are exempt. So before you purchase a card acquaint yourself with the form of card it is and become familiar with its drawbacks. It’s not wise to simply walk into a local retailer and buy a handful of cards. Get the terms and conditions first and then if you have questions call the 800 number provided on the paperwork and get answers.
When it’s finally time to present the gift cards be certain to also give the recipient the pertinent information regarding the terms and conditions, the original receipt and the cards ID number. It will safeguard them from unwanted fees and give them a better understanding of how the card works. And if they lose the card or don’t use it in the allotted time, they will have the proper information to get a replacement card or a chance at extending the timeline.
During the holidays gift cards may be convenient but they’re not foolproof. So understand the upside and downside before buying –it may save you and the person receiving the card from added stress and expense.
About the Author
The following post is from Kathryn Katz, a Certified Personal Finance Counselor who works for Consolidated Credit Counseling Services in Ft. Lauderdale, Florida. Their non-profit agency helps families through financial crisis using credit counseling, debt consolidation and financial education.