Ho, Ho, Holy Cow, is it that time of year already? For those of us taken off guard by how fast the season of giving has come upon us, there is some good gift-giving news. Many among us love the gift card, that one size fits all, never have to return it gift. This year, a gift card is a better gift than ever, as new rules are working (finally) in favor of the consumer to make gift cards less restrictive and less expensive.
Gift cards are increasingly the gift of choice according to the National Retail Federation, as this year, over 50% of adults say they would prefer gift cards over the traditional (it's a sweater, again!) gifts.
There are two kinds of gift cards. The first is a "closed loop" gift card and is issued by, and only redeemable from, a retailer like Target, Borders Books, or Neiman Marcus. The other is called a "network" card, is issued like a credit card by companies such as Visa or American Express and can be used for purchases anywhere the credit card is accepted.
Recent changes in the law have made gift cards much more user friendly. In the past, there have been limits on the cards like expiration dates and sometimes hidden fees like balance inquiry fees, or service fees. The new rules established under the Credit Card Accountability Responsibility and Disclosure Act address many of these issues. Essentially, under the new law, gift card issuers cannot charge fees such as maintenance, balance inquiry, or transaction-based fees until one year of inactivity has passed. Finally, gift cards must now remain valid for five years after the date they were issued.
State laws have addressed gift cards as well. In states like California and Massachusetts, maintenance fees have been completely banned. However, it is always good practice to read the fine print on every card before you decide to load it up with your hard-earned cash. There may still be requirements regarding pin numbers, loss/fraud prevention and some cards offer re-load or shipping options.
A few more suggestions from The Baltimore Sun on using your gift cards:
- use them quickly to avoid any maintenance fees
- if the card is for a retailer you don't use or like, consider trading or selling your card online
- consider giving cash instead -- it's not as pretty, but there are zero maintenance fees.
Finally, if you receive a gift card or two this year, don't forget about it. According to The Sun, a Consumer Reports survey found that more than one-quarter of those who received a gift card last year still haven't used it because they didn't have the time or just forgot about it.
- DiNapoli Warns Consumers Of Gift Card Pitfalls (WGRZ News)
- Black Friday (FindLaw)
- Baltimore Mayor Convicted on Stolen Gift Card Charge (FindLaw's Blotter)