Playing your gift cards right

The Holiday Guide To Gift cards


Gift cards have undergone a transformation in recent years, morphing from a last-minute, “Oh ... you really shouldn't have” type of gift to something people appreciate due to the near-guarantee they'll get something they actually want.

Some helpful laws have put in some ground rules that, when combined with a few other tips, will help you get the most bang for your gift card buck.

The ground rules

A change in federal law that took place back in 2010 has ensured that all store gift cards and those carrying the logos of one of the major card issuers (Visa, MasterCard, Discover, and American Express) have to follow certain guidelines.

The card cannot expire until five years after purchase, or five years after money is last loaded onto it. This can be incredibly important for the procrastinators out there, as it gives them plenty of time to use it.

Perhaps the biggest change in 2010 involved fees, which can now only be charged if the card hasn't been used for a year, and even then only once per month. This applies to all kinds of fees, including:

  • “Dormancy” (not using the card)
  • For loading money onto the card  
  • For using the card (a usage fee)  
  • “Maintenance” (the costs of keeping the card active, etc.)

Keep in mind that you can also be charged a fee just for buying the card, and that those are not restricted under law. (Thankfully, most places aren't going to have one, or charge a lot for one, as it would hurt sales.) Regardless of the fee or type, all of them have to be clearly visible on the card or its packaging (usually the latter due to space).

Also remember that these protections apply only to gift cards, not to reloadable cards intended for use as checking-account substitutes, nor to promotional or reward cards. Of course, even these need to have their fees and expiration dates clearly shared.

The tips

While shopping local can be great for your city, you need to make sure that any store-specific gift cards come from stores that will still be there when it's time for the recipients to go shopping. Granted, lots of things can happen to cause a business to fail, so you don't need to possess psychic powers. Just keep in mind the strength of the business and the chances for its longevity—if it closes or the business goes bankrupt, that gift card could be totally useless.

If buying the card online, make sure to use sites you know and trust. And be wary of auction sites, as they might give you what seems like a great deal, only for you to learn that the card is counterfeit or useless after you pay for it.

It’s also a good idea to include the receipt with the gift. They’ll know how much you spent anyway, and it’ll give them some protection if the card is lost or stolen because they can verify its purchase. 

Enjoy shopping

One of the best things about giving a gift card is that it tends to be a rather easy and enjoyable shopping experience. And whoever receives the gift card can get what he or she truly wanted, making it a happier holidays for everyone involved.

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Mark Dye

About the author: Mark Dye

Mark Dye has been writing articles, recording podcasts, and putting together books on personal finance for nearly a decade. His work has been recognized by the American Bankers Association and the Institute for Financial Literacy, and received an 2011 APEX Grand Award for Writing. Follow Mark on Google+.

Contact: Mark Dye


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