December 6,2006
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Be Wary of Credit Gift Cards
With the holidays fast approaching, you may be increasingly aware of the prevalence of gift cards issued by Visa, MasterCard, Discover, and American Express. TV and radio commercials boast of the great gift-giving potential of these cards, which are accepted anywhere that a regular credit card is, and offer recipients so many more options for redemption than a retail gift card.
What the ads don't tout, however, are the myriad hidden fees implicit in these gift cards. Expect shipping fees, inactivity fees, and delivery fees. Most of these cards have an expiration date, and, if they aren't used in time, it's "too bad, so sad" for the consumer. Retail gift cards, on the other hand, rarely expire, and generally do not incur fees. There are heaps of merchants offering them, so it's not hard at all to find the right gift card for a friend or loved one – and you won't get sticker shock from the exorbitant handling fees.
Of course, if you are the recipient of one of these credit card gift cards, the key is to use it without undue delay. It may sound ridiculously intuitive, but it's estimated that 23 million Americans have stuck about a billion dollars in gift cards in nooks, crannies, and drawers from last year – meaning free money for the issuing merchant. If someone gives you one of these cards, go ahead and go shopping. Better you receive the spoils of your gift than the bigwigs at the corporate level.