If you want to spread some fiscally sound good cheer this year, consider asking your friends, relatives, and coworkers not to give gift cards backed by the major credit card companies. Why am I making such a sour suggestion? Because a new study from two consumer advocacy groups indicates that most of the population still doesn’t recognize what a money trap those little plastic cards can be.
Most consumers do not know that it costs $4 to $7 to buy a general purpose gift card or that they may be subject to monthly fees of up to $4.95 as soon as six months after the card is purchased, consumer advocates said on Monday.
factoids findings from the survey, which was commissioned by the Consumer Federation of America and National Association of Consumer Agency Administrators:
- Only 33% of consumers “knew the fees involved in purchasing general purchase gift cards.”
- Only 54% “knew that that monthly fees sometimes kicked in six to 12 months after their purchase.”
- 17% said “they sometimes had trouble spending the entire amount of the card because a store refused to split a payment between the card and another payment method.”
The consumer groups told Reuters that “An estimated 10 percent of this value (the card’s original value) is never used.”
If you want to give someone the gift of money, there are so many better ways to do this—personal check, actual cash, or store-specific gift cards. Buy someone a general purpose credit gift card, however, and you’ll just be inadvertently giving a nice big gift to the card company.