Now that the holiday season is over, I’m sure that everyone walked away with a few gift cards from family, friends, or co-workers. Whether it be an i-tunes card, store card, or just a good old debit card, each gift card should be closely examined so you make a smart money move and don’t lose any value of the gift.
The Federal Credit Card Act of 2009 included provisions for gift cards that became effective August 22, 2010 and applies to cards sold after that date. Under the Act, many types of retail cards are prohibited from charging inactivity fees unless the card has been inactive for at least 12 months. All terms and conditions for a card must be disclosed directly on the card. Additionally, gift cards may not expire for at least five years after purchase. (source: federalreserve.gov)
Gift cards may still have terms and conditions that can decrease the value of the gift card. These include charging:
a service fee when the card is purchased;
a dormancy fee if the gift card is not used within a certain period of time;
a fee to call and check the balance remaining on the card; and
a replacement fee for lost or stolen gift cards. The bar code number and proof of purchase are needed to replace cards. (source: federalreserve.gov)
In my experience the fees above are not often seen unless the balance of the gift card are extremely low or you have not used the card for more than two years. However, you should be aware that gift card sellers now issue gift cards for returned merchandise or refund; those cards can be used the same way as gift cards. Cards can be purchased and redeemed at the seller’s physical location, the seller’s website and partner websites. This means if you are planning to return some of gift you received over the holidays, you should be prepared to know the rules around the card you get from the store.
Remember to check the rules of the state you live in around gift cards because each state has its own rules in terms of what happens if you die, file bankruptcy, and what overall protection they provide to the consumer.
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder oXYGen Financial, Inc.
Phone 1.800.355.9318 or 770.777.0427
oXYGen Financial, Inc. co-CEO Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.
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