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Givers should know the rules before they buy. Charges include checking amount left
By Candice Choi
Associated Press
Published on Monday, Nov 09, 2009
You buy someone a $100 general-purpose gift card. It's for their birthday, but it might be the bank that has reason to celebrate.
Despite your good intentions, such gift cards often come with a tangle of fine print and fees that can ensnare unsuspecting recipients. The recipient might not realize that a $3 monthly inactivity fee kicks in after a year. Or it could annoy him or her that it costs $12 to replace a lost card.
While the new credit-card law passed this year includes some regulations for gift cards, it doesn't eliminate many of the fees they often come with.
So before you start loading up on gift cards for the holidays, be sure you know the pitfalls.
There are two types of gift cards — store cards and general-purpose bank cards. The latter are Visa, MasterCard or American Express branded cards that you can use wherever those credit cards are accepted. These are the cards that often come with a mess of fees and terms.
Unlike with gift cards to specific stores, there are usually fees to buy general-purpose gift cards. Chase and Wells Fargo cards cost $3.50 apiece. American Express cards cost between $2.95 and $6.95, depending on the value of the card.
The cards can't be reloaded, and don't come with the same protections as credit or debit cards. So you can't dispute a purchase or issue a ''stop payment.''
Once a general-purpose bank card is purchased, the clock on the expiration date starts ticking.
At Wells Fargo, gift cards typically expire four years after the card is purchased. You can request a check for the remaining balance if you don't use up the card before then, but that will cost you $15. So if the balance on your card is less than that, you're out of luck.
The card's value could disappear even before the expiration date as a result of dormancy fees. Chase and Wells Fargo both start deducting $2.50 a month from cards after a year. So if left unused, a monthly fee could eventually deplete a card's value. Some cards start charging monthly fees as early as six months after purchase, according to the Consumer Federation of America.
American Express recently did away with the $2 dormant fee on its gift cards. The cards also don't have expiration dates, and replacements
for lost or stolen cards are free. The drawback is that American Express cards aren't as widely accepted as Visa and MasterCard.
The attraction of general purpose cards is obvious — they are no-hassle crowd pleasers and you can buy them at the last minute. But even apart from upfront and inactivity fees, the recipient can encounter several other surprising service charges.
If a card is lost or stolen, Chase charges $12 for a replacement card while Wells Fargo charges $7.50. There could also be fees of 3 percent or so on foreign transactions, as with many credit-card purchases. Other banks charge to look up the balance on a card.
The best way to be sure you're aware of all the fees is to read the fine print on the packaging before you buy any card. The cost for purchase and any other fees should be spelled out.
One way to safeguard a general-purpose gift card is to register it online; this will ensure you can get a replacement if it's lost or stolen. You'll need to report a missing card right away, however. If a thief goes on a spending spree with the card before then, you likely won't get a refund.
The other major pitfall with general-purpose cards is that people often don't use up the balance. One reason is that people often don't know how much is left on their cards, and merchants can't look up the balance.
You buy someone a $100 general-purpose gift card. It's for their birthday, but it might be the bank that has reason to celebrate.
Get the full article here.
Comments
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Posted 09:20 AM, 11/09/2009
Just write a check or give cash.
Posted 01:05 PM, 11/09/2009
Macy's will not / did not accept Kauffman's gift cards after they purchased the company. RIP OFF!
cuyahoga falls, oh
Posted 12:50 AM, 11/10/2009
banks have become a disease on the american economy by becoming a viruslike parasite devouring the expendable income of the average american worker...how many millionaires or multi-millionaires do you think buy or recieve these cards? to the contrary, they own the very companies or hold significant stock in the banks that sell them
