A few years ago, a military girlfriend gave me a $25 gift card for Christmas. It really meant a lot because I knew her family had a very limited income and it came from her heart. She told me to buy that new bestselling book that I wanted in a hardcover edition. My family was moving that Christmas, so I put the card in a “safe place” until the packers were gone. You probably already guessed that the place I stashed it was so safe that even I couldn’t find it! But lo and behold, about a year later, I found it in a desk drawer. The gift card was then 14 months old, and when I went online to check the balance, I discovered that my $25 gift card was only worth $2.50 because of monthly service charges. Drats, I hate it when that happens!
But there is good news for absent-minded gift card owners like me. The Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act) has new rules, which took effect in August, that will limit fees on gift cards and stored value cards.
All gift cards will require a minimum expiration clause of no less than five years. Furthermore, issuers may not charge inactivity fees or service fees for at least two years after the card is issued. After two years, sellers may issue one fee per month after 12 months of inactivity on the card under the new federal rules.
The above rules would apply to these types of gift cards:
- Restaurant gift cards,
- Reloadable gift card for any purchase at an ice cream shop, or
- Gift card for any spa service up to $100 (or other specific amount).
But buy a card from a mall or get a prepaid bank gift card, which can be used at multiple unaffiliated stores, then you can incur fees after only 12 months of inactivity.
Certain gift cards and certificates are excluded from the federal rules, meaning they could expire earlier than five years or incur fees earlier than 12 months. For example, the federal restrictions would not apply to any of the following:
- Gift cards used exclusively for business purposes,
- Reloadable student debit cards that are only valid only on campus,
- Certificate for a free manicure at a local spa, or
- Certificate for admission to an amusement park, listing no specific value.
Sometimes when I receive a gift card, it’s almost as if the person didn’t put a whole lot of thought into the purchase. However, if they take the time to personalize it with a photo or meaningful greeting or if it even has my name on it, then I know it was really bought for me with forethought. Many retailers will allow you to order a card online, upload a photo to personalize it and then pick it up at the store of your choice.
Checks and Balances
Not all stores have the ability to check the balance on your card in the store, so be sure you check it online before you shop. Most have a toll-free number that will allow you to call to learn what the current balance is.
When you get a card, be sure to register it online with the issuer. Starbucks has a special gold card status that will allow you to earn free upgrades and complimentary beverages. Registering a card will also allow you to check the balance both online and with a toll-free number. In many cases, if the card is lost or stolen, you can get a replacement for a nominal fee (usually $5).
Even though, as mentioned earlier, companies are not permitted to initially charge a monthly service charge, they try to get around the CARD ACT by charging card purchase fees and monthly “membership” fees. This is especially true in the prepaid bank card world. To avoid most fees, buy your card directly from the retailer or vendor. If you buy a “use anywhere” card, then expect to pay an upfront fee to upload money onto that card.
When you buy your card, you are entitled to a printout of all the terms and conditions of the gift card. Here is where you will find out any up-front fees, monthly membership or other fees and limitations on the use of the card (i.e., if they can be used online or only in a store). Be sure your recipients get this paper so that they will know how to get the most bang out of their gift!
Look for great deals this holiday season on gift cards. Some stores may only have you pay $80 for a $100 card, and others are giving free personalization. Go to www.restaurant.com to find more discounts on dining out gift cards or certificates. I found some where I bought a $25 certificate for our favorite restaurant for only $2! Remember that cards are available almost everywhere these days: spas, beauty salons, airlines, state parks, health care offices.
No matter who is on your list, you can find the perfect card for them. If any of you are shopping for me, be sure to send Starbucks gift cards!