Dunnan on Dollars

  Personal Finance Tips from Nancy Dunnan

The Skinny on Gift Cards

$TIP: If you're thinking of purchasing a gift card from another source, wait a while - it's very likely that other companies will follow AMEX's example. They're all concerned that this holiday season shoppers will go for merchandise that's on sale. In other words, they will buy a $50 pair of shoes on sale for $40 rather than a $50 gift card.

Or better yet, wait until 2010 when gift cards will look even better. In August of that month, the law will stop issuers from putting an expiration date on their cards, unless the date is at least five years after the card was loaded.

Meanwhile, some things to keep in mind about gift cards.

When Purchasing a Gift Card

(1) Where does it work? Store-specific cards work in a particular store and/or on the store's website.

General purpose cards, like those issue by American Express, MasterCard and Visa, are generally accepted everywhere. But check details first. Not all cards can be used for airline, train and bus tickets.

$TIP: Store specific cards tend to have fewer and less hefty fees.

(2) When does the card expire? The majority expire in six months or a year. Some run longer. You'll also want to know that once the expiration date has come and gone if the person you give it to can get a replacement card with the remaining balance loaded onto it. And, if so, what is the fee for a replacement card; they typically range from $5.95 to $10.

(3) What other fees are there?  Find out about fees for shipping and handling. They can be anywhere from $1.95 to $8 or $9. Express delivery, of course, is even more. Better bet is to purchase your gift card in person from the retailer.

If You're A Recipient

(4) Is my card exchangeable for cash? Most are not, although some general purpose gift cards will send you a check. But be aware that you'll be hit with a fee.

(5) What if I want to buy something that costs more than the card's value?  Call the store first. Rules vary widely. Some require cash for the difference and most insist that this be an in-the-store purchase rather than an online one.

(6) Are there monthly fees? As we noted in our opening paragraph, American Express has dropped its monthly fee. It kicked in after one year. Check with the issuer. Better bet: Use your card right away.

Finally, don't forget to thank the person who gave you the card and let him or her know what you purchased - unless you cashed it in!

- Nancy Dunnan

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