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Beware the gift of plastic

by Monica Pleuler, staff writer


If you are given a retail gift card, and you put it in a desk drawer and come across it a year later, it’s likely to be worthless. That is because many gift cards expire and once they do, your money disappears. If the store allows a replacement of an expired card, the replacement will likely carry a fee of $5 to $10.

Retailer gift cards have become increasingly popular with holiday shoppers, but this popularity is turning some retailers into card sharks, who add all sorts of other undisclosed card-related fees: fees to purchase it, replace it, maintain it, and fees for not using it. To make matters more confusing, the fees are not universal. Each card issuer plays by a different set of rules. Not all cards carry all fees.

Traditional paper gift certificates are gone, modern gift cards are plastic and look like credit cards. Retailers like the idea of gift cards better than gift certificates, because they don’t have to issue a new certificate for the balance when only part of the amount is spent.

Along with the convenience of gift cards, come monthly fees that shrink the face value of a card as it goes unused. Consumer Reports Money Advisor warns that the built-in fees on some cards can eat up most, if not all, of a card’s value.

Many prominent chains such as, Kohl’s, Kmart, Toys “R” Us, Red Lobster, Blockbuster, Olive Garden, and Chili’s begin to assess fees of $2 a month after 24 months of nonuse. The fees are implemented to make sure shoppers come into the store to purchase more.

Retailers that offer cards without any fees added, will be replaced by the retailer if lost are: Best Buy, Borders, Wal-Mart, Target, and Circuit City, Gap. Old Navy, and Sears.

Many customers have complained about the hidden fees. As a result, there were more than 80 pieces of legislation were proposed to govern fees and expiration dates. Several states, including Hawai‘i, California, Connecticut, and New Hampshire, have already enacted laws to limit fees or expiration dates on gift cards.

The Hawai‘i law defines gift certificate to include gift cards, including stored-value cards. Hawai‘i’s existing gift certificate law also requires gift certificate issuers to maintain records of gift certificate purchases. The record must include the date of sale, the full value of the certificate, the identification number assigned by the issuer to the certificate, and the county in which the sale of the certificate took place. The issuer must also provide a written and numbered receipt to any consumer who purchases a gift certificate exceeding $50.

The National Retail Federation advises gift card buyers to ask about card fees before making the decision to purchase. If you receive a gift card over the holidays, make sure you understand the rules before you play the game.

If you don’t want to risk getting caught in a gift card trap, you can always go low-tech. Cash and checks have worked pretty well for years, and they still do.


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