2006 Gift Card Study
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"What's happened in terms of closed-loop retailer gift cards is that retailers want to be consumer-friendly," says Horne. "All but a few have backed away because benefits accrue to them whether there are fees, expiration dates or not."

The Bankrate.com study bears this out. Last year, Sears had a five-year expiration date on its plastic gift card and Costco had a two-year date on its electronic gift cards; neither has an expiration date now. Macy's and Bloomingdale's have two-year expiration dates, except in those states where such terms are not allowed. All of the other retailers have eliminated expiration dates.

Still, some retailers haven't given up their dormancy fees. These are fees that are charged monthly after six or 12 months, depending on the terms of the gift card. CVS charges $2 per month service fees after 12 months. The stores owned by Delhaize America -- Food Lion, Hannaford, Kash n' Karry and Sweetbay -- charge $2.10 per month in service fees if a card has been inactive for 24 months.

The open-loop cards, which can be used at a variety of retail places, continue to impose fees, though, since that is how they make their money.

Discover Card charges $3.95 for a regular gift card (that includes shipping) and $6.95 for its premium gift card package; last year Discover Card gift cards were shipped free. MasterCard charges $5.95 per card, compared with zero to $6 last year. Visa gift cards cost $2 to $10.95, depending on where the card is purchased (shipping is additional). American Express charges $3.95 to $7.95 per card plus delivery.

American Express gift cards are the only open-loop cards that do not have an expiration date. American Express does have dormancy fees, however. After 366 days from the issue date, it charges a $2 monthly service fee. MasterCard gift cards expire after six months, and Visa's expire after two or three years, depending on where it is purchased.. MasterCard charges a $10 inactivity fee after the expiration date and $3 per month thereafter -- down from the $5 per month fee last year, but still a fee. Discover Card gift cards expire in 24 months and charge a $2.50 monthly fee if the card isn't used for 12 consecutive months.

Yet, this doesn't discourage some consumers, says Horne. "I think people are continuing to buy the open-loop cards regardless of fees. They serve a niche. They give consumers a lot of choice -- or let the recipient make the choice. They're especially good for gifts for people you don't know very well."

Disclosing the fees
Understanding what fees are charged has often been difficult, too. "What we found in our recent research is that on those cards that don't charge a fee, disclosure is clear and easy to understand," says Horne. "Others are intentionally obfuscating. Best Buy card says no expiration, no fees -- very simple and very clear. If you go to somebody who's going to try to get a fee, it's in a smaller point type. It's dirty pool."