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Did you receive a “gift card” for Christmas this year? If so, your card is one of around $100 billion gift cards given yearly.
Gift cards have increased yearly since they were first introduced, but many are never used. As one study showed, “27 percent of people receiving gift cards had not used them nearly a year later.” In 2006, $8 billion worth of gift cards were never used.
The two major reasons given for not using gift cards were: “they didn’t have the time to shop” (58 percent) and “they couldn’t find anything to buy” (35 percent). The leading causes of consumer frustration with gift-cards are fees and expiration dates.
As part of the Credit Card Accountability Responsibility and Disclosure Act of 2009, there are new regulations to protect those receiving gift cards because of the amount of money lost from unused or misplaced gift cards. The new law went into effect on Aug. 22, 2010.
According to the Federal Reserve, new regulations address:
• Store gift cards — those for a particular store or group of stores, such as a book store (Barnes & Noble, Joseph-Beth, Borders) or clothing retailer (Macy’s, Wal-Mart, Kohl’s).
• Gift cards with a MasterCard, Visa, American Express, or Discover brand logo. These cards generally can be used wherever the brand is accepted.
There are now “Limits on Expiration Dates.” The money on your gift card will be good for at least five years from the date the card is purchased. If you reload it, it will also be good for at least five years.
You can request Replacement Cards (at no cost) in the event your card expires with unspent money on it.
If your gift card has an expiration date, you may be able to use money still on the card after it expires.
For example, a card expiring in five years, with money (including additional money added) may now not expire for seven years after the money was added.
Check your cards for any expiration dates.
There are no more hidden fees. All fees must now be clearly disclosed on the gift card or the packaging.
There are also fee limits.
Any card fees were typically subtracted from the money on the card. Under the new rules, there are fee limitations. Generally, fees can be charged if you haven’t used your card for at least one year. You are only charged one fee per month.
These restrictions apply to fees such as dormancy or inactivity fees for not using your card, fees for using your card (sometimes called usage fees), fees for adding money to your card, and maintenance fees.
You can still be charged a fee to purchase the card and certain other fees, such as a fee to replace a lost or stolen card.
Make sure you read the card disclosure carefully to know what fees your card may have.
These new rules may apply only to gift cards, not all cards with a brand logo.
The new rules do not cover other types of prepaid cards, such as:
• Reloadable prepaid cards that are not intended for gift-giving purposes. For example, a reloadable prepaid card with a MasterCard, Visa, American Express, or Discover brand logo that is intended to be used like a checking account substitute is not covered.
• Cards given as a reward or as part of a promotion.
For example, a free $15 gift card given to you by a store if you purchase merchandise or services of $100 or more may have fees or an expiration date of one year rather than five years.
Regardless, you must be clearly informed of any expiration dates or fees for these cards.
Grace Angotti is Carroll Co. Extension agent for family and consumer sciences. Call her at (502) 732-7030 or send e-mail to email@example.com.