Can’t decide what to get Uncle Seymour, who already owns every tool, fishing lure, baseball cap and gizmo ever made? Maybe a gift card is the answer.
Millions of us buy billions of dollars’ worth of gift cards each year to allow people to buy a gift that’s meaningful to them. It takes some of the strain off those shoppers who long ago ran out of novel gift ideas.
But contrary to being “the gift that keeps on giving,” gift cards might more accurately be described as the gifts that will become worthless sooner or later. If you don’t spend them, most cards will lose value over time until ultimately they’re worth nothing.
Not all gift cards are created equal. Gift cards that are issued by banks and carry a Visa, Mastercard, Discover or American Express logo can be used in any store that accepts those cards. Store cards generally can be used only at the store whose name the card bears, although some can be used for purchases at other stores owned by the same parent company.
Different gift cards will likely also carry very different costs. The bank-issued cards usually come with all kinds of fees. You may be charged for the original purchase and activation, plus monthly maintenance fees, transaction fees and reloading fees. You may be charged for not using your card (inactivity or dormancy fee) and for replacing a lost card.
People who receive gift cards often leave money on them. Consumer Reports surveyed 1,000 card recipients two years ago and found that about one quarter of them had not made a single purchase.
That’s OK in states like Maine, which have laws barring expiration dates on gift cards. Such laws don’t exist in most states; those monthly fees mean cardholders can see their gifts disappear if they’re not spent within the one- or two-year life of many cards.
That will change next August, when a provision of the new federal credit card law takes effect. The law will mandate that gift cards have a useful life of at least five years. It will also ban inactivity-dormancy fees for the first year and place limits on those fees to one per month after the first year. It also stipulates that stronger state laws will apply if they’re in effect.
If a card is lost or stolen or if there’s a billing dispute, you’re at the mercy of the issuer of the card. The Federal Reserve is thinking about adding legal protections for consumers in such cases.
If you’re considering giving a gift card, check the fees, card life and replacement policy before buying. Know that, if a card balance runs low, some stores won’t accept a “split payment” to make up the difference, even if you pay the difference in cash.
Get help with problems over store gift cards from the Federal Trade Commission, www.ftc.gov or 877-FTC-HELP. For problems with bank-issued cards, contact the Maine Attorney General’s Office at http://maine.gov/ag/consumeror 626-8800.
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded, nonprofit consumer organization. Individual and business memberships are available at modest rates. For assistance with consumer-related issues, including consumer fraud and identity theft, or for more information, write: Consumer Forum, P.O. Box 486, Brewer 04412, or e-mail firstname.lastname@example.org.