Today’s Money Monday comes from my friend, Jill Russo Foster of Cash, Credit and Your Finances.
This weekend is the unofficial end to summer. Kids are back to school. So, what’s next? The holidays! I was in Costco and they had Christmas wrapping paper out two weeks ago. Shouldn’t they at least wait until after Halloween?
Speaking of gifts, have you ever been surprised to find that your gift card was expired or zeroed out before you had a chance to use it? Maybe you had it tucked away in your purse, waiting for seasonal sales or a special occasion. Maybe you put it in a drawer and forgot about it. Where did the money go? It could have been eaten up by service fees or absorbed back into the company that issued it.
You not alone. Many people have been disappointed to find that their money was wasted on a gift that came with hidden fees and expiration dates. That’s why a provision for gift cards was included in the Credit Card Act of 2009. The new rules just went into effect on August 22nd.
Here’s a summary:
Which cards are affected?
The gift card must have been purchased on August 22, 2010 or later. The card must be a gift purchased by one person for another person. It does not apply to rewards cards issued by a store, or business expense cards issued by an employer. The gift card can be purchased from specific stores or groups of stores, or as a credit card brand gift card (like American Express, MasterCard or VISA), that can be “reloaded” which means that the gift giver can repeatedly deposit money onto the card for the benefit of the gift receiver.
Dormancy, Inactivity and Service Fees
These types of fees are usually deducted from the gift card without your knowledge. Thankfully, companies can no longer deduct these fees, unless: 1. There has been no activity on the card for a one-year period. 2. They only deduct one fee each month. In other words, they can’t charge you both a service fee and an inactivity fee in the same month. 3. All fees are clearly printed on the gift card or the packaging.
All other fees
Some cards have initial issuance fees, cash out fees, and replacement fees. All fees must be clearly printed on the gift card or the packaging.
Expiration Dates
Going forward, all the funds on gift cards must be good for at least 5 years from the date of purchase or the date of the last deposit (or reload). Notice that there is a difference between the funds available and the card itself. If the funds are still available, but the card expires, you can either receive a replacement card at no cost, or the remaining balance.
I hope that explains the new rules for you. If you’d like more information, see the official Federal Reserve Document. Gift cards used to be a little risky, but now they make great, long-lasting gifts.
Jill Russo Foster is the author of Cash, Credit, and Your Finances: The Teen Years. She provides practical tips for every day finances. Learn more about protecting your credit and living within your means, with Jill’s popular free reports and bi-monthly ezine, available here ==> CashCreditandYourFinances.com
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