The holiday season is just around the corner and a lot of people, myself included, find it easier to buy gift cards other than a traditional gift, however many of us are hesitant to do so fearing hidden terms and conditions.
Gift cards are an 87 billion dollar a year industry and retailers like these cards. The gift card not only draws customers to their store or website there is the added benefit of the company getting cash up front. However, unspent cards can be a loss to consumers.
Even though the CARD Act (Credit Card Accountability Responsibility and Disclosure Act of 2009) has set out to make gift card giving more secure for consumers, even with the protective rules and regulations it is still important that you practice smart shopping. One of the best things to come out of the Credit Card Accountability Responsibility and Disclosure Act of 2009 is that gift cards cannot expire for at least five years.
After a year, only one fee can apply per month, and the amount and terms for fees must be disclosed to the user in advance.
There are some fees, like issuance or sales fees that aren’t covered by the CARD Act. These fees can chip away at your balance each time you make a transaction, check the balance, call customer service or request a replacement card.
Michelle L. Corey, BBB president and CEO says that “Gift cards may look like a good deal, but it pays to check the fine print before you buy one,” “You may be better off simply giving cash or a check rather than a piece of plastic.”
If you are going to purchase a gift card, there are few things you need to keep in mind:
— There are no maximum to the monthly fees when it comes to charges for inactivity. As long as the fee is disclosed when you buy the card, a company could charge a very high amount.
— Some cards skirt the 5 year expiration by operating like a debit or credit card and have an expiration date. In order to get your balance, you might have to request a replacement card… and likely get charged for it. Expiration dates should be disclosed when you buy the card.
— Be sure to check the terms and conditions of the gift card you are considering buying. If you are giving a card to a friend who you know will want to shop on line, make sure the card you buy can be used for that and not just for in store purchases. Again, any fees or limitations should be disclosed on the packaging of the gift card.
If you purchase a gift card as a gift or for yourself, the Federal Trade Commission wants you to be smart about how you use it…
- When you get the card, read the card and any terms and conditions. Check for an expiration date or fees.
- If it appears that the value of your card has expired, or that fees have been deducted, contact the company that issued the card. They may still honor the card or reverse the fees.
- Ask the person giving you the card for the card’s terms and conditions, the original purchase receipt, or the card’s ID number; keep this information in a safe place.
- Use your card as soon as you can. It’s not unusual to misplace gift cards or forget you have them; using them early will help you get the full value.
- Treat your card like cash. If your card is lost or stolen, report it to the issuer immediately. You may not recover any of the value that was on the card. Some issuers will not replace cards that are lost or stolen, but other issuers will, for a fee. You may need to show proof of purchase and the ID number on the card. Most issuers have toll-free telephone numbers you can call to report a lost or stolen card.
Make sure you research any company carefully before giving them your business. You can check out BBB Reliability Reports online at http://www.bbb.org or by calling 314-645-3300.