Gift cards are a very popular way to give a gift to someone. You don’t have to worry about size, color, or individual taste. In this case, one size fits all, as long as you pick a store or restaurant that the recipient likes.
However there are a few things you need to think about or decide on before you purchase a card. The following are some of the most asked questions concerning gift card purchasing.
What value do gift cards come in?
The answer to that question depends on where you buy the card. Some merchants set a beginning price of $25.00, with the ability to go higher than that in nearly any increment. Some businesses might have a lower minimum and some more expensive establishments might even have a higher minimum. It’s something you will need to ask before you buy. I received a $5 gift card from Starbucks at Christmas that was just the right amount for one coffee drink.
How long is the gift card valid?
This too depends on the place the card is bought. Some businesses have a one year limit, with others having a five year limit. One thing you can be sure of, there will be a limit. Quite a few of the cards will have a decreasing value starting with several months after purchase. A gift card should really be redeemed as quickly as possible after receiving it to get the full benefit of the card.
In the US there are new Federal Regulations on gift cards that will go into place on August 2010. This new law insures that the card must not expire for five years and that no fees can be assessed if the card is used within the first 12 months. If you have gift cards that were issued before August 2010, use them. There are some gift cards that may become null and void when the new regulations go into effect.
Can I get my money back if the card is lost or stolen?
The answer to that question is usually a definite NO. Gift cards are normally cash cards not registered to a specific name but to a card ID number. Anyone can use them. You need to think of a gift card as though it were cash in hand. If you lose cash, you’ve just lost it-no one pays you anything for it. The same is true with a gift card. By the same token, if you find one that still has a balance on it you might as well use it because there isn’t any way to trace it back to a specific person.
How do I check my balance?
This is fairly easy as most cards can be read by a cashier. If the card is for a specific business you would need to check with a cashier in that particular store or a branch of that business. If it is a gift card that can be used anywhere any cashier should be able to scan it and tell you the balance. Sometimes there is a number or website on the back of the card where you can call or go online to check balances.
Does all the card value have to be used at once?
That answer is a general no. But it might depend on the amount that is left on the card. If the balance left is only a few dollars, by the time you get around to using it again the few dollars may have decreased to a few cents or nothing at all because of “no-use” fees or other charges.
In most states in the United States the establishment issuing the card can make up their own rules and regulations. They can even change those rules after you’ve bought the card and not bother to tell you of those changes. They can charge an interest on the card and deduct that interest when the card is used. And as explained above, the card can have an expiration date even if that wasn’t specified when the card was purchased.
Some of these business practices will be managed by the new federal government regulations, but not all of them. If you are spending very much money-or any money- on a gift card you really need to get some written commitments concerning the card.
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Store credit cards and gift cards can be convenient and tempting. They can also be trouble if not used properly and managed well. Below are three of the most commonly asked questions and answers about store credit cards and gift cards.
Isn’t It Worth Signing up for a Store Credit Card in Order to Get the Ten Percent Discount?
Unless you are making a huge purchase, the answer is no. Even if you ARE making a huge purchase, the answer is still usually no because there is often a limit about how much you can save with the ten percent discount.
While it may seem tempting to get a small discount for signing up for a store credit card, the bottom line is that it is just not worth it. Even if you really never use it, you will have to go to the trouble of canceling it.
Also, your credit score may take a small hit just from the store doing the inquiry on your credit report while processing your application.
The biggest reason it is not worth it is because, even if you have the best intentions, many who say that they are signing up just to get the discount, do go on to use the card. Store credit cards are just not a good thing to have. The interest rates are usually much higher than those for the major credit cards and the late and over the limit fees are typically the highest amount allowed by law.
Do Gift Cards Have Any Hidden Negative Features?
Gift cards can be a convenient way to get all of your gift shopping done, but it is important to know which gift cards have features that may make them not such a great deal.
One such feature, that will typically not be made known to you when you are purchasing the card, is an expiration date. Because a certain percentage of consumers will never use their gift card, the stores can count on a good profit from their sale. To ensure these profits, many stores place expiration dates on their gift cards. Some are only good for six months from the time of purchase.
Service and non-use fees are another unsavory aspect of some gift cards. A non-use fee is charged for every month that the card is not used after a specified period of time. A service fee is a monthly fee that is charged as long as there is a balance on the card, whether it is used or not.
Many feel that both fees and expiration dates are unfair, and have fought successfully to have limits placed on the issuers of gift cards.
While new federal laws have put limits on these types of features, they have not eliminated them completely. There are many gift cards that have no expiration date and do not charge any non-use or service fees. Be sure that the gift cards that you give are one of those.
As Long as I Pay Them Off Each Month, Are Store Credit Cards a Good Deal?
If you pay them off during the grace period then store credit cards are just as good of a deal as any other credit card. If you pay the balance in full during the grace period then you will not have to pay any interest so it is the same as if you paid cash.
The problem comes in that one month when you do not get your payment in before the grace period ends. When that happens, you will have to pay an extremely high interest rate. Even people with good credit often pay an interest rate up to 29 percent.
It is a good idea to avoid credit cards with high interest rates. Instead, choose a major credit card with a reasonable interest rate that can be used at most any retailer.
While you might intend to pay the balances in full each month, the truth is that you can’t really predict what circumstance could come along that may prevent you from doing so, and 29 percent interest is just too high of a price to pay.
Store credit cards and gift cards are not all the same. Be sure you know exactly what you are getting before buying or applying for either type of card.
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