No Visa Or MasterCard Gift Cards This Year, Please

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.

More sad 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.

“US consumer advocates warn of gift card costs” [Reuters]
(Photo: SuZenDu)

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  1. CompyPaq says:

    Whenever I get one of these cards (Rebates, gifts, bonus, etc.) I apply it in its entirety to a bill(s) as soon as I can.

    • Verucalise (Est.February2008) says:

      @CompyPaq: I just did that, recieved a prepaid mastercard as a baby shower present.

    • mazzic1083 says:

      @CompyPaq: I usually use it to splurge on something unneeded but even though I don’t get behind on bills I like this idea. It’s free money either way and at least it goes towards a balance of a monthly expense.

  2. Xerloq says:

    I completely agree with the recommendation EXCEPT for the piece about store-specific gift cards.

    • azntg says:

      @Xerloq says Can I has Friday?: Yup – not only are you locked in to that specific store (God forbid that the gifter and giftee don’t see eye-to-eye on shopping preferences), some stores like to play fast and loose with the cards (and that may include fees).

      And no, everybody doesn’t live in states with relatively strong and pro-consumer gift card laws.

    • blash says:

      @Xerloq says Can I has Friday?: Yep. The whole reason why general purpose gift cards were introduced in the first place was in response to the annoyance of getting a gift card to Abercrombie & Fitch when you wear a suit and a tie every day, or getting a $25 gift card to Whole Foods and knowing you’d never really get anything for that $25.

      People: either give someone a tangible item (if you want to seem thoughtful) or give them cash (if you feel like you need to fulfill an obligation, if in person) or a check (if sending a gift by mail). In general, people can get at least a debit card with a Visa logo on it these days to do online purchases so there’s really no excuse for buying a general-purpose gift card.

    • lmarconi says:

      @Xerloq says Can I has Friday?: Then again, in our family, everyone asks that everyone write down 2 or 3 stores that they enjoy and regularly go to, whether it’s Dunkin Donuts or a specific mall store or Target or whatever. That way you know what direction to go in as far as presents are concerned, and if you end up getting a gift card, at least it’s something they’ll use. I actually don’t mind getting gift cards like this because they’re stores I like to go to anyway, and next time I see something I get to splurge. I suspect a lot of people are the same.

      • pecan 3.14159265 says:

        @lmarconi: Yeah, we’re being told by now that we have to be specific about what we want – Mr. Pi’s parents have seen him undergo drastic changes with how he dresses and now they’re at a loss as to what kinds of clothes to buy him. He has instructions to not only email the names of the stores he likes, but also sizes, shirt cuts, and preferred colors.

        The last thing we need is a gift card to a place we don’t go to, like Sears.

        • TheSpatulaOfLove says:

          @pecan 3.14159265:

          Mr. PI doesn’t have a tool fetish? That’s where all my Sears GCs go towards! ;)

          • pecan 3.14159265 says:

            @TheSpatulaOfLove: Nope. We don’t have any room for power tools or additional screwdrivers. We have two hammers, a set of six screwdrivers and that’s about it. Mr. Pi likes video games more.

            • mazzic1083 says:

              @pecan 3.14159265: I’m the same way but see myself changing. The wife and I just got a house and have been spending the first month fixing it up before moving in. needless to say much less time for video games and more and more time in lowe’s or home depot. And, of course, slowly but surely the tool acquisition begins!

        • lmarconi says:

          @pecan 3.14159265: Well, it is really nice to get something unexpected and have the person love it, but that’s hard to do unless you know them really well. I don’t mind suggestions because at least you can be genuinely excited when you open something (and not have to fake enjoyment over your crappy gift from Aunt So and So). My parents have taken “suggestions” a little too far though – if there’s something major I need at the moment (a new winter coat, a coffeemaker) they buy it now for me as a “xmas gift” and I just open less or nothing on xmas than everyone else. It’s really nice of them, but receiving something in september doesn’t really say “xmas” to me.

    • Charmander says:

      @Xerloq says Can I has Friday?: I agree that you should ask people you are giving gift cards to where they like to shop.

      As a matter of fact, my sister just asked me what kind of gift card I’d like to receive for my birthday: Starbucks, (local) grocery store, or (chain) retail store. She knows what I like, and she knows I’ll spend the entire amount on something I like.

      • HogwartsAlum says:

        @mamalicious: Hear hear; or don’t buy something from a store they don’t go to, as most returns (clothes that don’t fit, CD they don’t like, etc.) only get store credit. If they don’t like the store and won’t buy anything else there, you’ve wasted your money.

    • TheWillow says:

      @Xerloq says Can I has Friday?: Meh. I got a $100 Bloomingdale’s gift card as my Christmas Bonus my first year working. After deciding not to buy the gem-encrusted stapler (the only thing I could find for under $100 besides socks), I sold it to my Aunt and everyone was happy.

  3. carefreeamit says:

    Amex has no maintenance fee

  4. TheOrtega says:

    While it IS better is someways to give money, I don’t identify a particular $20 bill in my wallet to a person(gift giver) like a I would with a brightly colored $20 gift card. Visually a Gift card is better IMO but value wise cash is better. Buy something that is a little bit more then the value of the card($1 and change) and you still get a pretty good deal on something you were gonna buy anyways and the store doesn’t keep the change.

  5. Outrun1986 says:

    I agree, the best thing to do if you get one of these cards and your the type to forget about them is to use it to buy an Amazon gift card. This is very easy to do, just buy the gift card and have the code emailed to you. Then enter the code in your account. Amazon credit does not expire and believe me they probably have something you want to buy.

    I really don’t understand why people just don’t give cash instead, I would rather have the extra $5 spent to buy the card in my pocket.

    • ShadowFalls says:

      @Outrun1986:

      I would generally agree. Some people like something physical, a printed out email doesn’t always appeal. Good gift if you intend to send something to someone out of state though.

  6. Veeber says:

    eh, if you’re going to give cash just give cash in a nice envelope. We just need to get over the idea that cash is a tacky present.

    • metsarethe... says:

      @Veeber: I wholeheartedly agree, I think cash is a perfectly acceptable gift and a much appreciated one too.

    • tbax929 says:

      @Veeber:
      Cash is definitely not tacky. I prefer it to almost any other gift someone could give me. I get so much crap I’ll never use. I’ll ALWAYS use cash!

    • laughingisfree says:

      @Veeber: i agree. I found this small card with a small envelope made for cash. The card even mentioned cash. A dollar for the card and envelope (which was made from recycled paper) and a crisp $50 made for a nice quick gift with no thought needed.

    • AlexDitto says:

      @Veeber: I agree that cash is the purest form of value exchange in what we refer to as “gift giving,” and should not be shunned as “tacky.” However, the giving of cash (or gift cards, for that matter) makes me question what the value of the gift giving process is in the first place. Theoretically, if you give someone a gift, they will eventually give you one in return (which is the situation in which the least awkwardness is generated), and all that matters is the net difference between the two gifts. It’s kind of ridiculous.

      I think if you don’t know someone well enough to get something thoughtful for them, you shouldn’t be expected to get them anything at all, except for maybe a Holiday-themed cookie or a nice Holiday-specific card. Otherwise, the whole ordeal becomes less like gifting and more like balancing a social checkbook; how much did so and so give me last year? I have to give them that much this year, unless they give me more this year in which case I’ll give them more….

      • oneandone says:

        @AlexDitto: I think if you don’t know someone well enough to get something thoughtful for them, you shouldn’t be expected to get them anything at all

        My problem is that I want to give family members gifts that aren’t *things* – for example, a somewhat far away sibling wants to come visit but can’t afford the airfare/train. My aunt loves manicures but never gets them for herself. I’d like to give them some gift card that can be used for these purposes, but the visa/mastercard/etc ones are too much of a rip-off and store-specific giftcards don’t really apply.

        I’m probably going to give them cash & a handmade coupon saying “to be used for airfare to visit your big sister!” or something similar. If the cash ends up being used for rent, food, etc I guess that’s fine, but I’d be a little sad. So I see the attraction of gift cards – the gifter gets to exert a bit (lot) of power over what the giftee gets to do with the present.

        • BridgetPentheus says:

          @oneandone: @oneandone:

          I like that idea very much. For our wedding some of my husbands friends flew over from Europe which I think is present enough and made us a dvd and a card and they researched how much it would be to take a hot air balloon ride around us and gave us cash for that. Unless I know someone who goes to the same place every day (ie starbucks) or spends a ton of money at one store (Macys mom) I don’t buy giftcards. I want to give them something that they need or reflects them, like knowing they want to go somewhere or are saving towards something I can help out financially rather than giving something because I have to. When I was younger I knew that one relative wouldn’t have enough money to give me what I wanted (say a camera for a trip) but I would ask for contributions towards the purchase that way they knew I was saving it to go towards something tangible but not out of their price range. Something I don’t see much anymore, savings bonds, they can still be good gifts because you can forget about them till you need them in an emergency.

    • RogerTheAlien says:

      @Veeber: The Japanese do it for both weddings AND funerals. Those have to be the two most high-visibility times for “thoughtfulness sans tackiness” in gift-giving, yet money is pretty much just assumed to be the gift of choice. No idea why the US and a lot of Western countries can’t understand that?

  7. metsarethe... says:

    I agree with above posters, I use the card immediately as to ensure I get the full intended benefit.

    Side note: I believe factoid is used in the wrong sense above

    Factoid -

    1 : an invented fact believed to be true because of its appearance in print
    2 : a briefly stated and usually trivial fact

    [www.merriam-webster.com]

  8. tbax929 says:

    The only time I buy gift cards they’re for restaurants that I know the giftee frequents. I have an assistant who loves Starbucks, so I know she’d actually use a Starbucks card. I have another one who likes happy hour at TGIF’s. So she gets TGIF cards.

    I think if you’re buying a store-specific card, it’s okay as long as you know the person frequents that place.

  9. Ragman says:

    Store specific cards are similar to buying gifts – you still need to KNOW something about the recipient. We have relatives that will send a check on birthdays, but at Christmas, they feel they have to do something a little more. Then we end up with Best Buy gift cards. At least we can find stuff we want – of course, the whole time shopping we’re thinking “That’s cheaper on Amazon, Fry’s has that cheaper…”

    We use our cashback rewards to buy gift cards through Discover, so far the ones we’ve gotten don’t have expiration dates/maintenance charges. And they’re for places that the family like to shop/eat at.

    • pecan 3.14159265 says:

      @Ragman: Generally, it’s cheaper online, but you’d be using your own money in that case – so if it’s a little more expensive at Best Buy, you’re winning on that end because it’s not your money.

      • Ragman says:

        @pecan 3.14159265: I know that, but I still have to go through the store looking for a decent deal on something I want first.

        What I need to do is just hang onto the card for the following year’s Black Friday sale, which is when I usually end up buying something from BB.

  10. Buckus says:

    I hate those gift cards. I hate the rebate ones, too. What is wrong with a simple check? Oh, yeah, people might actually use the whole thing.

  11. pecan 3.14159265 says:

    I don’t mind gift cards as long as it is to places I shop at. Sometimes our relatives live in an area that doesn’t have any stores they we shop at, so they go online and order us gift cards from the stores we like. It’s better than guessing at our style and sizes (even if I say I’m a small, someone will get me a large – listening comprehension isn’t their forte, I guess), and us having to deal with returns.

    • HogwartsAlum says:

      @pecan 3.14159265: Yes yes YES. I ask people, if you’re going to get me a gift card, make it Barnes and Noble, because I WILL use that. That’s after many years of begging them not to buy me clothes that don’t fit.

    • oneandone says:

      @pecan 3.14159265: Some of my relatives assume the stores in our area are the same as the stores in their area, so we’ve ended up with a few gift cards that can only be used when we happen to way out of town. It’s annoying, but I know they’re trying to be nice. And I think them trying to pick out an actual gift would be even more off the mark.

  12. G.O.B.: Come on! says:

    Cash. Just give cash in crisp, new, large bills.

  13. catastrophegirl chooses not to fly says:

    trying to make it easier on my family this year – added the amazon button for putting anything from any website on a universal wishlist.
    it’s really specific but they can still surprise me by choosing from among lots of options in a variety of price ranges.
    now if the rest of my family would do the same… my dad is SO hard to shop for.

  14. MooseOfReason says:

    The people that were polled — had they purchased a prepaid credit card before? Otherwise, you may well have asked them to name several companies that offer those types of cards.

  15. Alternate says:

    I only use these because I lack a credit card of my own, and I dont want to get one to make the occasional online purchase (IE, carproof report).

    • wcnghj says:

      @Alternate:Are you eligible for a checking account?

      Could save on some fees.

      • jamar0303 says:

        @wcnghj: …Citibank US has epic monthly fees. I feel lucky that they only charge an ANNUAL fee of less than US$3 here for checking account holders in China. Given my current finances I am not capable of staying above the “no-monthly-fee” line so might as well pick the low one (even if the debit card involved is going to confuse people back in America).

  16. Verucalise (Est.February2008) says:

    Dunkin Donuts gift cards and Lotto tickets, people!

    They are the future!

  17. hewhoroams says:

    This reminded me to check the balance of a card I had in my wallet as a gift from work.

    balance: $0. $2.50 removed every month for the last 4 months I’ve forgotten to use the last $10 on it.

    Awesome.

  18. edosan says:

    I knew all about those not-hidden “hidden fees.” I guess they’re hidden if you don’t read the card.

    I also know that if I send a package through the mail to relatives far away, I’m doing to spend at least $5 in postage and probably more.Then my relatives get exactly what they want and it doesn’t arrive late or damaged.

  19. Hooray4Zoidberg says:

    Funny I just found an Amex gift card I got last Christmas and never used. I realized they have a steep monthly service charge of like $2.99 a month. Fortunatley it doesn’t kick in for the first 12 months so I still have the full value. I was planning on using it today to make sure I don’t lose out on it. But it’s only by chance I even found this card while cleaning.

    I do hate these things, I’m the worst at using gift cards. It’s a terrible business. I’ve probably wasted a total of at least $200 over the past 5 years in unused cards or ones with like $6 left on them for a restaurant I barely ever go to. It really only works if you know it’s a place like dunkin donuts or someplace the person stops at everyday.

  20. ohenry says:

    Do stores really have a separate policy for Visa Gift Cards, or would that apply to credit cards in general? I’m referring to the last one about how some people had trouble splitting the card with another form of payment.

    I guess I haven’t had troubles at most of the stores I’ve gone to for the few times I’ve had to split between cash and my debit card, but it seems like this would be a general store policy on mixing and matching payment rather than something specifically targeted to Visa/MC gift cards.

  21. Xerloq says:

    @lmarconi: That works, too, unless you have someone in your family who enjoys agonizing over the gift, really trying to put thought into it.

    My employer uses a service that allows them to give a value and let the employees choose where to get the gift cards. Trouble is you can’t choose cash…

    @pecan 3.14159265: I like video games way too much. The only positive turn my addiction has taken is that my collection takes up no actual space, thanks to digital distribution. (Our 360 serves duty as a media extender, only)

    L4D2 demo delayed twice! C’Mon! Oh, well. I’ll at least get to slay some zombies after our earnings call tomorrow.

    And that was a really long reply to a day-old thread, but hey, I never got the most discussed thread before. Feels good!

  22. Steven Francis says:

    These gifts of cards actually shows care. So one option is to look for the best offer and then gift. As far as I know there are many card lenders who do not charge any card continuation fee.