Thursday, December 9, 2010

Gift Cards Might Not Be Such a Bargain

From Forest Leaves.

"Dear Fixer: Just thought this might be worth repeating (during) the holiday gift-giving season. I learned from the customer service rep at my supermarket that the big credit card companies charge processing fees for their gift cards from $3.95 up to $5.95.

Margo Sliwa"

Dear Margo: Thanks for the reminder. Those credit card-branded gift cards are fun to give -- pre-teens especially think they're cool -- but a fee like that can take a big bite, especially if you only wanted to put $15 or $20 on the card.

Those credit card-branded gift cards also offer fewer protections. Under Illinois law, monthly fees or fees for non-use cannot be deducted from gift cards purchased in our state and the cards must remain valid for at least five years. But some cards are exempted from the law, including credit card gift cards, grocery gift cards, free promotional or award cards and prepaid phone cards.

Please note, however: Even gift cards covered by the law can have an upfront fee, just no additional fees later that cause the card's balance to drop.

So choose your gift cards wisely. And be sure to use ones you receive ASAP. You never know when a store or restaurant might go out of business.


Also, to minimize transactional fees, minimize your transactions--buy big-denomination (Visa or Mastercard) cards and use them once or twice, clearing them completely out before resorting to cash. Be sure to use them in ways that will pay you twice or more.

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