credit cards

Using a gift card under the CARD Act

As consumers and card issuers alike adjust to newly implemented rules and regulations under the CARD Act of 2009, it's important to recognize that these new guidelines extend further than standard bank-issued credit cards. Here are a few essential lessons to understand about how this new legislation affects the world of gift cards:

Bank-issued versus retailer-issued cards

Be aware of the differences between a bank-issued card, which you can use anywhere, and a retailer-issued gift card, which you can only use at a specific store or online site. While new legislation will do little to affect retailer and store-issued cards, bank-issued cards will be impacted.

More time for spending

Remember the frustration of realizing that a $100 card you received for the holidays expired without you knowing it? Those days are gone. Under these new federal guidelines, each card will include an expiration date. Even better news: That expiration date will be at least five years from the date of purchase.

One word of caution, though: Some cards that do not have on-the-card expiration dates and term disclosures will still be sold through the 2010 holiday shopping season. The ECO-Gift CARD Act allows card issuers to sell existing card stock through the end of January 2011 before reprinting to abide by these new rules.

Fewer fees for postponing your purchase

Forget worrying about a monthly service fee or being penalized for not using your gift card. This new consumer protection prevents inactivity or service fees until the card has reached a one-year period of nonuse.

As you consider purchasing a gift card for someone on your holiday list, keep in mind that bank-issued cards will still include some kind of upfront fee. While recipients will enjoy being able to use it anywhere, make sure you find a card with a low activation cost. They will reward you with a card of your own -- a thank-you card.

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