Be Careful with Gift Cards

Gifts cards can be the way to go. They are convenient, allow the receiver to buy what he or she wants, and eliminate the need for exchanges. But, if you are not careful about purchasing a gift card, you can lose the money you spend on a gift for someone, and that someone you bought for can lose the gift all together. Last year 6.8 billion dollars worth of gift cards were never cashed. Your money may be among those billions.

If you don’t want your money to go down the drain when buying a gift card for someone, you need to be aware of some things.

• You should know that the Credit CARD Act (2009) has eliminated expiration dates on gift cards and limited gift card fees, BUT that law will not go into effect until January 1, 2011. (Although it was supposed to take effect in August 2011, card companies begged for an extension and got it.) So if you buy a gift card before January 2011, you must look to make sure it has the expiration clearly printed on the card if it was issued before April, 2010. If you buy the card after the law takes effect, be sure to note there is no expiration date.

Note: There are some types of gift cards that are exempted under the Credit CARD Act. Prepaid phone cards and gift cards given as promotions are examples of cards exempted.

• Fees can reduce the value of a gift card quickly. You should know fees will be limited on gift cards, too, because of the new law. Before the law, issuers of gift cards could charge the holder for lack of use, for reloading the card, or for checking on the card balance. After January 2011, only one fee can be charged per month, and there can be no lack of use charge at all unless the card has not been used for a year. If you buy the card before January 2011, make sure you check with the issuers what fees do exist on the card.

Check on other aspects of the card that are not affected by the new Credit CARD law.

• What is the protocol if the receiver loses the card?
• Can it be redeemed if you have the receipt?
• Will the full value of the card be issued again?
• Who is the contact for replacing a lost card?
• Can you redeem any balance left on the card after a purchase?
• Some states allow cash back if less than $5.00 or so, a small amount, is left. How can someone make sure he or she can use the full value of the gift card, including the bit of small change that might be left?

Where can the card be used? Some cards may be used at restaurants but only with a purchase of $25 or more.

• Will any store accept the card?
• Can the card be used over the internet?

• And, inform the person to whom you give the card about how to get the full value of the card. Explain that if she doesn’t use the card for a whole year, there can be a fee charged that will reduce the value of the card. If the card is not used for two years, it can become unclaimed property. Let him know what to do if he loses the card. Explain that there are some fees involved, but only one per month. Let them know they can redeem the balance of the card in cash and how.

You must be an aware buyer of gift cards so you do not waste your money. You must also make the receiver of the gift card aware of the benefits and cautions of the card so he or she will receive what you paid for.

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