Gift Card Certificate Tips

Gift Card Tips
For many gift givers, buying and giving a gift card is a no-brainer, but before you purchase a gift card for someone this holiday season – or if you receive one - there are things you should know.

Depending on where you buy a gift card, there will be different rules for where and how it can be used, and what fees apply.

For example, some stores' gift cards expire after a period of time, and other gift cards have a monthly fee that eats away at the gift card value if not used by a certain date.

Here are some of the most important terms and conditions of gift cards that you should check:


Expiration Dates: Some gift cards can expire after 12 to 24 months if not used, which means the gift card is worthless if not used by that date. About 18 states have passed laws banning or limiting expiration dates on gift cards, but even so, nationwide, the value of unredeemed gift cards totaled over $2 billion last year alone. Gift cards sold in some states cannot expire sooner than seven years, some states require full consumer disclosure by any retailer selling a gift card that expires and in other states, unredeemed gift cards are considered abandoned assets after three years and are turned over to the states unclaimed property departments.


Purchase or Issuance Fee: Some gift cards come with add-on fees that are charged when the gift card is issued. A fee of $5 to $10 can be added to the amount of the cost for the card's gift value. When a gift card includes a $10 issuance fee, then the fee is 20 percent of the actual gift value of a $50 gift card! Needless to say, gifts cards with issuance fees should be avoided.


Maintenance or Inactivity Fees: Some gift cards also charge a maintenance fee; for example, $2.50 per month is lopped off the card's value if the gift card is not redeemed after six months. Some gift cards even charge these monthly fees retroactively back to the date of purchase, which can quickly eat up all or most of the gift card's value if recipients do not redeem the card soon after they receive it. This is also one trick gift card providers use to get around laws in some states that prohibit expiration of gift cards.


Replacement Fee: Many gift cards will now allow you to register the card on their Web sites, allowing you to check the remaining balance and to request a new card to replace one that is lost or stolen. Other gift cards provide toll-free phone numbers to call to report a missing or stolen card.

When replacing a lost or stolen gift card, you will need to provide the tracking number and a copy of the original receipt, so record and keep the original receipt in a safe place. For some cards, the value will not be replaced if lost or stolen. Other gift cards may charge $10 to replace a lost or stolen gift card.

Other fees on gift cards can include transaction fees charged for a high number of smaller transactions and fees for balance inquiries.


Usage Limitations: Some gift cards can be used at any store location; others can be used only at stores that are affiliated with the merchant from whom the card was purchased.

You'll also want to know if the card has other limitations. Some may not be used for purchases in a catalogue or on the merchant’s Web site. Other limitations on gift cards might mean that you can't sell your card to another individual, apply the value as a payment to a store credit card account, or redeem the card for cash.


Bank Gift Cards Still Have High Fees. Bank-issued gift cards, unlike gift cards issued by retailers, can be redeemed at any store that accepts credit or debit cards. But the advantages of bank-issued gift cards end there. Consumer Reports states that, unlike gift cards issued by retailers which have become more consumer friendly, bank-issued gift cards typically charge hefty fees and remain a bad deal overall.

According to Consumer Reports, most bank-issued gift cards charge issuance fees, monthly maintenance fees and replacement fees. Expect to see some bank-issued gift cards getting better over time, particularly as they face legal action by states where their fees are in conflict with a state's gift-card law.

The bottom line: Check gift card fees before you buy. Those fees usually are posted on the gift card sleeve or on the Web site. Buy gift cards with no issuance fees, expiration dates or maintenance fees, which can easily be found with gift cards issued directly by retailers. And if you receive a gift card, use it promptly - not only to avoid possible maintenance fees and expiration, but also to take advantage of post-holiday discounts.

Source: CBS Early Show