Stumped for a gift for a family member or friend?
Gift cards may seem like a simple solution. But many of the cards have so many strings or fees that they are far from a good deal.
Recent changes in federal law have improved consumers’ chances of getting full value out of the cards they buy and give. The Credit Card Accountability, Responsibility and Disclosure (CARD) Act, which took effect in 2010, also applies to gift certificates, store gift cards and general use prepaid cards, which are often branded by payment networks, such as Visa or MasterCard.
Consumers will now have at least 12 months – a full year – to use the cards before they lose value. And the cards keep their value for five years after purchase, or from when you last added money to them, whichever came last. And after a year, only one fee may be charged against the card’s value every month. The card issuer has to tell you about those fees in advance.
But there are some things the CARD Act didn’t cover.
Issuers can still charge fees every time you use the card, check the balance or ask for a replacement card. They can even charge you for calling customer service!
So before buying a gift card, consider these facts:
- There is no limit on monthly fees a company can charge after a card has been inactive for a year. The issuer has to tell you about it, so ask when you buy a card.
- The actual card may expire before the five-year redemption period for a card. In other words, if the card is expired but it still has value, you may have to ask for (and possibly pay for) a new card. Look for expiration dates when you buy cards.
- If you give a friend a card and they want to shop online rather than in a store, make sure it’s good for that. Some cards have limitations on where or how they can be used. Look for the fine print on the packaging of the card when you buy it.
And maybe, just maybe, you may consider giving your friend or family member cash or a check instead of a gift card. They can spend that anywhere, anytime, and it will always be worth its face value.