Every year at this time, gift cards become a hot topic, and we’ve written more than our share on the subject, explaining the various tricks and traps.
Nevertheless, gift cards remain one of the most popular gifts to give and to get, though last holiday season marked the first time in four years Americans actually reported receiving fewer cards, according to our latest Consumer Reports holiday shopping poll. Moreover, one of four gift-card recipients have yet to redeem a card they received in 2008.
Bankrate.com, a personal finance Web site, just released a new study comparing the terms and fees associated with 29 different gift-card issuers. Bankrate’s findings are a clear reminder that all cards aren’t created equal. You can read the entire report by clicking here. In short:
• If you don’t spend the card after the first 12 months, you could be hit with unexpected fees. In September, American Express announced it would no longer charge a $2 monthly service fee after 12 months -- and that change is retroactive to old cards, too. However, Bankrate’s study found that Discover, MasterCard, and Visa still tack on a $2.50 monthly maintenance fee after 12 consecutive months of inactivity.
• Store gift cards are free, others aren’t. There’s typically no charge to purchase a gift card from your favorite merchant. But if you choose to buy the gift card online instead of at the store, you could be hit with a handling fee. At Starbucks, for example, the fee is $1.50. Credit-card issuers, by contrast, always charge a purchase fee, typically $3.95, though it can vary depending on the card’s value.
• Pay attention to the "valid-thru" date. It’s something you’ll find on cards issued by credit card companies. While technically not an expiration date, it reflects the estimated lifespan of the card’s magnetic stripe. Shelf life for the stripe is about five years, and if you have a card with a past-due valid-thru date, contact the company for a replacement card.
• When buying a gift card from an individual merchant, be sure to ask if the card is valid for online use. While it’s not an issue for most retailers, some companies such as CVS, T.J. Maxx, and Marshall's do not allow their gift cards to be used online, Bankrate says.
• The federal Credit CARD Act pertaining to gift cards takes effect on Feb. 22, and the regulations require that the cards remain valid for at least 5 years, unless that information is clearly disclosed on the card. Dormancy, or inactivity, fees will still be allowed after 12 consecutive months of inactivity.
Postscript: Don’t throw away those old gift cards
Speaking of gift cards, here’s a lesson in how persistence can pay off handsomely. On a recent shopping trip to a Bloomingdale’s in New Jersey, my colleague Donna Tapellini presented the cashier with three $50 store gift cards, two of which had expired, according to the saleswoman. Tapellini was annoyed and prepared to walk away, but her partner, Corey Glaser, who’s doesn’t easily take no for an answer, wasn’t about to give up.
“Isn’t there something we could do?” Glaser asked the clerk, emphasizing the fact that the couple had just given the store plenty of business.
The clerk, clearly peeved and dismissive, suggested Glaser and Tapellini call the phone number on the back of the cards, though she didn’t hold out much hope. They called anyway.
After entering the serial number for the first card, the automated robot voice on the other end confirmed the fact the card was expired, but then instructed them to “press one.” Upon doing so, the voice said, “Your card has been activated.” The same thing happened with the second card. By investing a couple of minutes, they found $100. Not bad.