Credit Card Act Gift Card Protections Make Gift Cards LESS of a Rip Off
Perhaps the least publicized portion of the credit card act that passed last year is the section that addresses unfair gift card practices. The new gift card protections won’t take effect until August 22, 2010. Here’s a preview of what will be changing.
Not Just for Gift Cards
The new protections not only will cover gift cards, but also prepaid cards and gift certificates. Promotional, loyalty, and re-loadable cards (prepaid Visa and MasterCard, for instance) are exempt from the new restrictions.
What are the New Gift Card Rules?
-
Gift cards cannot expire within five years from the date they were activated, unless the expiration date is clearly disclosed at the time of purchase. - If the gift card expires after 5 years, that also must be clearly disclosed to the buyer.
- No inactivity fees on gift cards except in certain circumstances, such as if there has been no transaction for at least 12 months.
- If there are inactivity and dormancy fees, they must be clearly disclosed at the time of purchase.
What’s Not Covered?
Outside of the previously mentioned time limits, all existing fees are fair game, including those pesky purchasing fees (you know, when you spend $105 for a $100 gift card).
The bottom line is that gift cards are not a good deal, they never have been, and they probably never will be. Plus, trust me, the recipient would much rather have the cash. The Card Act gift card protections won’t prevent that.
Gift Card Discussion
- Do the new rules make a gift card purchase more appealing to you?
- Under what circumstances have you purchased gift cards in the past?
- Have you ever been given a gift card that has expired? Were you ticked off?
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So pretty much nothing has changed…
1. “Gift cards cannot expire within five years”…”unless the expiration date is clearly disclosed”.
2. “No inactivity fees on gift cards except in certain circumstances, such as if there has been no transaction for at least 12 months.”
that sentence is a direct contradiction of itself.
what gives?
Regardless of all the downsides to gift cards they are the most requested gift and will only continue to grow in popularity. That is why I have a patent pending on my new business which allows the consumer to purchase a prepaid gift card from my site, http://www.MatterOfChange.com, “link” it to a charity of their choosing and send the card to the recipient. After a predetermined time period, chosen by the purchaser, any remaining balance on the card will be donated to the chosen charity in the names of either the purchaser or the recipient thereby circumventing any bank, corporation, or state treasury from claiming the money as theirs. This process will essentially boost the donating power of the consumer without having the consumer reach into their pocket to donate from money they have set aside for the family and necessities. Our interview in the NY Times,http://bucks.blogs.nytimes.com/2010/02/09/a-charitable-use-for-leftover-gift-card-funds/#more-11017, shows how we will enable the consumer to assist in bettering our world 1 card at a time!
@ Mike – what ‘gives’ is lobbyists. Although maybe it should be what ‘takes’.
@G.E.Miller not to be rude, but the ‘what gives?’ was directed at you… this is really a non-post isn’t it? there have been no real changes, as long as it is “clearly disclosed at the time of purchase” they can still do anything they want, right?
my only real question is what does ‘clearly disclosed’ mean exactly.
I’ve only ever given 1 gift card as a gift myself: to my best friend for Christmas, an Aeropostale gift card, when we both loved the store. The only reason I gave it to her was because I knew she would be buying stuff from there very soon regardless, so I was basically handing her cash, but showing that I did in fact know what she liked (I also gave her some Godiva chocolate–another thing we both loved back then).
She ended up giving me the same gift that year. So we exchanged gift cards and chocolate.
Apart from that, I’ve never given anyone a gift card. It’s either cash and a card, or an actual gift.
I’ve gotten a few, including a $500 Amex gift card from work (as a bonus for graduating college), and some gift cards to Starbucks, Cosi, etc. Places I go all the time and would spend money on regardless.
Sometimes it’s thoughtful (more so than an envelope of cash), but it’s always less convenient. Why do I need to carry around another card in my wallet, worrying about the remaining balance?
I still have a Cosi gift card with $3 on it in my wallet. That wouldn’t happen if the giver had just given me $50 in cash.
I couldn’t disagree with you more. If you give me cash, I’ll spend it on groceries and electricity bills. The money will be gone without a thought. If you give me a gift card, however, I’ll be forced to (allowed to) be self-indulgent without feeling guilty.
Shelley,
It depends on the person. I know if I get a generic gift card, I’ll still spend it on groceries and bills. I’d feel guilty spending it on anything else because it’s still money. However, when I get a gift card for something specific, I don’t feel guilty spending it because I have no choice. I’d never get starbucks coffee normally, but with a gift card, it’s no longer overpriced. So I spend it because if I didn’t spend it, the money would go to waste.
But if I could pick between 10 cups of coffee or $50, I’ll take the $50, personally.
We give and receive gift cards all the time. I make sure to only give ones that will be enjoyed (stores the recipient goes to all the time) and have no expiration date. I also have never paid a fee to buy a gift card. I either buy them directly from the store or get them with my Discover cash back rewards (no fee and discounts to boot).
I prefer to receive gift cards from places I like instead of cash, because I’m like Shelley above – I’ll bank the cash and use it for bills, but I get to have fun with a gift card. I have a serious frugality problem sometimes…gift cards are appreciated.
I agree that gift cards are pretty lame, in general. I don’t think I’ve given one for, like, ten years. I have gotten them, though, and it always annoys me because more often than not, I don’t want anything from the store to begin with. Gift cards generally suck, but if you do get one you don’t like, you can at least resell them and get SOMETHING out of the deal (though obviously you’re not going to get the whole value–but if you simply will never buy anything from Babies R Us, etc.). If anyone’s interested, here’s a link on places to go to resell gift cards.
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