While gift cards are a popular gift for those who are hard to shop for, buyers should beware.
Most of the time, thankfully, gift cards work just fine. But there are a few issues with gift cards that you should consider.
Rule number one for gift cards: Use them. An estimated 5 percent of cards don’t get used at all within a year after purchase. Depending on the card you have, that could also start costing you. Plus, if you don’t use it in a year, are you really going to?
Rule number two: Spend it all, even if it means going over a bit and paying the difference in cash. If you spend $45 of a $50 gift card, that $5 could be in serious jeopardy of being forgotten. And if you use 90 percent or more of a store gift card, the retailer must offer you the option to take the balance in cash.
Massachusetts law is very generous to consumers when it comes to hanging on to cards sold by retailers for use at their own stores, ensuring they can’t expire for at least seven years. Store gift cards typically are not subject to administrative fees.
But not all cards are subject to that law and it doesn’t mean it’s a good idea to hang on to them.
“Consumers should be aware of the type of card they are buying,’’ said Barbara Anthony, who runs the state’s Consumer Affairs office.
That’s because the general cards that carry logos of the big credit card companies often have fees when they are purchased (usually about $3 to $5) and dormancy charges of about $2.50 a month. “Some people refer to these types of gift cards as ‘the gift that keeps on taking,’ ’’ Anthony said.
A federal law protecting consumers’ use of gift cards is in effect this year for the first time and requires that none of those cards can expire in less than five years. It also prevents dormancy charges if a card is used anytime in a 12-month period. Otherwise, the balance will start shrinking.
Mitch Lipka is the Consumer Ally for AOL’s WalletPop.com and lives in Worcester. He can be reached at ConsumerNews@Aol.com.
© Copyright 2010 Globe Newspaper Company.
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