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
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
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,
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
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