Gift cards: More options, more fees

NEW YORK (11/7/07)--If you're the recipient of a gift card this holiday season--and experts say more than 75% of all consumers are expected to receive at least one card--be sure to investigate whether there are hidden fees or expiration dates (Business Week Nov. 5). Visa just announced it is launching a service to let consumers personalize cards with photos and engraved messages. Visa hopes to get a bigger piece of the gift-card market, which has expanded 20% annually, compared with a 7% annual growth rate for standard credit card spending. The program is new for Visa, which is telling users to go to www.GiftCardLab.com to set up personalized gifts, for a fee.

This program, according to Business Week, will deactivate the gift cards one year from the print date and charge "account closure fees" before returning the balance to the cardholder. Research firm TowerGroup estimates that about $8 billion of card value goes unredeemed by consumers who fail to use the cards. Visa's customization program isn't new. Wal-Mart has allowed customers to personalize its store gift cards since 2005, and other retailers have followed suit. The Federal Trade Commission offers advice on steps to take before you buy gift cards:

• Read the fine print before you buy. If you don't like the terms and conditions, buy elsewhere.
• Ask about expiration dates and fees. This information may appear on the card itself, on the accompanying sleeve or envelope, or on the issuer's website. If you don't see it, ask. If the information is separate from the gift card, give it to the recipient with the card to help protect the value of the card.
• Inspect the card before buying. Verify that none of the protective stickers have been removed. Also make certain that the codes on the back of the card have not been scratched off to reveal a PIN (personal identification number). Report tampered cards to the store selling the cards.
• Give the recipient the original receipt. The receipt is required to verify the card's purchase in case it is lost or stolen.
• Ask about purchase fees. Is there a fee to buy the card or activate it? If you buy the card online or on the phone, is there a fee for shipping and handling? Does expedited delivery cost more?
• Consider fees for the recipient. It might be embarrassing to give a $50 gift card to someone if much of the amount gets gobbled up in fees.
• Check on purchase exceptions. For example, can the recipient use a store-specific gift card at either the physical store or at the store's website? Can an "all purpose" card really be used to buy groceries or gasoline?

courtesy of cuna.org