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The lowdown on gift cards

Before you give that hard-to-shop-for someone a gift card, be sure to take a close look at the fees that come with it.

There's nothing remotely festive about monthly maintenance charges and other fees your gift card recipient may be tagged with. And the hefty shipping, handling and service fees charged to the gift-card giver can take a big chunk out of any budget. As appealing and convenient as gift cards may be, you'd better take a good look at the boring old fine print that comes with it.

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And while several states have passed new gift card laws aimed at bolstering consumer protections, being a smart and savvy card shopper is still the best protection of all.

Here are 10 important questions every gift card giver and recipient should ask:

1. Where can I use my gift card?
The answer depends on the type of gift card that is purchased. There are two kinds of gift cards: store-specific gift cards and general-purpose gift cards.

You can use a store-specific gift card to buy merchandise from a particular store or through a store's Web site. Not all gift cards can be used for online shopping, so be sure to ask. A general-purpose gift card from Visa, MasterCard or American Express may be used almost anywhere those cards are accepted. Important exceptions, including airline tickets, may apply. Be sure to check with your gift-card program for details. The key advantage of general-purpose gift cards is the flexibility you have in using the cards. The downside? Fees, fees and more fees. Many general-purpose gift cards come loaded with fees. It's important to shop carefully.

If you know a person's tastes, a store-specific gift card may be the way to go. Store gift cards are less likely to charge hefty fees.

2. When does the gift card expire?
Is your gift card good for six months? A year? Even longer? Be sure to check.
With some gift cards, once you pass the card's expiration date, you're done. It doesn't matter how much value is still on the card, you won't be able to use it.

Other gift-card programs will send you a replacement card with your remaining balance on it. But you pay for this privilege. Fees on replacement cards range from $5.95 to $10. Your best bet is to use your gift card before it expires.

States such as California, Washington and New Hampshire have passed laws eliminating gift card expiration dates. For details on gift-card laws in your state, contact the attorney general's office in your state.

3. Are there shipping and handling fees?
Ordering a gift card online is convenient, but you could be zapped with a fee for shipping and handling. A prepaid Visa gift card from National City charges a $4.95 to $8.95 fee for shipping and handling. Want that gift card delivered on the double? You'll pay more. You can minimize or avoid these kinds of fees by shopping early and purchasing gift cards directly from retailers.

You may be able to save yourself a few dollars per gift card by ordering your cards online rather than over the phone. Be sure to check.

States such as California and Washington have passed laws eliminating or restricting service fees. For details on gift card laws in your state, contact the attorney general's office in your state.

5. Is there a monthly maintenance fee?
Some gift cards will charge you a monthly maintenance fee if you still have a balance on your card after six months or a year. With the American Express Gift Card, a $2 monthly fee kicks in after a year. With the Bank of America Visa Gift Card, a $2.50 monthly fee kicks in after just six months.

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-- Posted: Aug. 27, 2004
     

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