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Gift Cards

With hidden fees and expiration dates, the gift card could just be the

Worst. Gift. Ever.

By Vanessa Puig

cards1    The holiday season poses some of life’s most difficult questions. What did I achieve this year? What am I thankful for? And what am I going to get Aunt Betty for Christmas?

Finding the perfect gift can become an agonizing task resulting in a huge headache. Luckily, we have the convenience of purchasing gift cards, where our grateful recipients can buy whatever they desire at their favorite stores.

Or are they convenient? What shoppers may not know is a gift card can cost you much more than the value you pay when you discover the hidden fees.

Last year, retailers made billions in gift certificate sales alone. Researchers at The Tower Group reported that retail stores raked in $29 billion, followed by restaurants at $18 billion and miscellaneous retailers (i.e. gas, services, etc.) at $12 billion. A nice chunk of these card purchases will go unused by the recipients, leaving companies with about $8 billion in unspent money. On top of that, many of these companies include fees in their terms and conditions should a recipient take too long to use the card or lose it and need it replaced.

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For example, according to an independent study done by one of Maryland’s Consumer Protection offices, Toys “R” Us advertises no expiration dates on its gift cards, but doesn’t loudly announce that after two years of non-use, $2 will be deducted every month from the card’s balance.

Most retailers no longer impose inactivity fees, but some also do not explicitly advertise expiration dates. Bloomingdale’s fine print on its gift cards notes that a recipient can “check the expiration date or balance” with its toll-free number – not the most conspicuous policy statement.

But not all cards have hidden fees. Stores like Best Buy, Abercrombie & Fitch, Apple and Old Navy not only eliminated expiration dates, but they will replace a lost or stolen card so long as you provide proof of purchase with a receipt.

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The worst of the bunch are bank cards, or “use anywhere” cards, such as the ones offered by Visa and Discover. One of the priciest on the market is the American Express gift card and cheque. As with any other gift certificate, you can include whatever amount you wish…and then pay the processing fee. That’s right – in addition to the money you’ve already placed on the card, you must pay an additional fee of $3.95 per card or $2.50 per cheque before you can even use it.

If a gift card is lost, American Express will gladly reimburse you, for another $5.95 replacement fee. If you do not use your card within 365 days, American Express will begin deducting $2 every month from your card balance. Visa’s iCard expires after a mere six months; afterwards, a $25 fee per every six months is charged after the initial six-month period is over.

Rule of thumb? Make sure that no matter where you purchase a gift card, you check the retailer’s terms and conditions. Otherwise, your hard earned bucks may end up in the hands of the wrong recipient.


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0 0 217 03 November, 2007 Advice, Lifestyle, Money November 3, 2007

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