Posts Tagged ‘gift cards’

Gift cards may be small, but they mean big business to the retail and banking industries. According to MasterCard subsidiary TowerGroup, gift cards generate nearly $90 billion in sales each year. With every gift card comes fine print, which could mean additional fees or use limitations. Before buying a gift card, consumers should research the fees and limitations online or directly on a card’s packaging.

Types of Gift Cards

Bank-issued gift cards are branded with the logo of a major credit card company and can be used at any business that accepts the credit cards. Although flexible in use, bank-issued cards tend to charge a number of fees.

Retailer-issued gift cards are issued by stores, restaurants or other businesses and are usually redeemable in that business only. Their policies tend to be more consumer-friendly and they charge fewer, if any, fees.

Activation and Delivery Fees

Many bank-issued cards charge a fee just to be activated, while retailer-issued gift cards are usually activated for free. Walgreens drug stores sell dozens of retail and bank-issued gift cards. The retail-branded cards sold at Walgreens have no activation fees, but bank-issued gift cards with the Visa and American Express logos do require an activation fee.

If a gift card is purchased by catalog, phone or Internet, a shipping charge may apply. Shipping charges can be avoided by purchasing a card directly at a business location. Some gift card issuers will ship gift cards for free, so consumers should watch for such promotions.

Some cards utilize a dormancy fee, usually a monthly service fee, if it is unused for a period of time. A new federal law prevents a dormancy fee if a gift card has been used in the prior 12 months, and consumer pressure has led many gift card issuers to eliminate dormancy fees altogether.

Flexibility of Use

Each gift card has certain limitations. Some gift cards may require purchases to be made either in person or online, or may limit what types of purchases the gift card covers. Some gift cards have no time limit to redeem the card, while others add an expiration date, sometimes as little as one year from date of activation, or the unused balance is forfeited. Gift card issuers know that unused balances mean profits for them. Consumer Reports says nearly 10 percent of all gift card balances are never used, an additional source of revenue for companies that issue them.

Some retailer gift cards are redeemable at other retailers owned by the same parent corporation. Old Navy gift cards can be used at the Gap and Banana Republic stores, while a gift card to Chili’s can also be used at Romano’s Macaroni Grill, On the Border and Maggiano’s Little Italy.

Only a small number of retailer gift cards allow a user to redeem the card for cash. Old Navy cards, for example, allow cash to be redeemed if the card balance is below $5.

Lost or Stolen Cards

If a card is lost or stolen, most issuers will require an original receipt or the card number to replace it, so the receipt should be given with the gift card to the recipient. Some issuers charge a significant fee to replace a card.

Tips to Avoid Gift Card Scams

Scambusters.org warns consumers of schemes involving gift cards. Thieves can steal card numbers and customer service phone numbers off gift cards displayed in stores and later call in to find out if they have been purchased and activated. Once a card has been activated, the thief uses the card number to order items online, draining the gift card before the real owner has a chance to use it.

To avoid problems buying gift cards in person, Scambusters suggests only purchasing cards that do not show their numbers through the packaging or are displayed behind counters to avoid tampering.

Consumers should avoid buying gift cards from third parties like eBay, newspaper ads or CraigsList. These scams often involve stolen gift cards, used gift cards or even counterfeit gift cards that sell for less than the face value and leave a buyer with worthless cards.

With a little research and a few precautions, consumers can not only avoid the pitfalls of high gift card fees, they can also find just the right card that will be used and appreciated by the recipient. Researching the policies and fees of a particular gift card could avoid future problems and help a consumer find just the right gift card.

Victor Medina

The new Current Card from Discover is one of many financial solutions aimed at the teen and young adult market. This particular tool is a debit card that offers an unprecedented level of control for parents, while helping teenagers learn how to manage their finances before they step foot in the “real world.”

Unlike credit cards, the Current Card allows teens and parents to load it with whatever cash they feel is appropriate. Once they have put cash on the card, parents can set parental controls on how their teenagers can use the card as well as where they can use it.

Loading the Card

The Current Card from Discover is different from most teen credit cards in that the amount available to use for purchases and withdrawals is established by how much is deposited into the account. For example, if a teenager’s parents load it with $500, he or she cannot spend more than $500. In other words, it works like debit cards do when attached to savings or checking accounts.

The Current Card can be loaded for free from any bank account or credit card. It is even possible for parents to establish recurring deposits, such as $200 per month from a credit card. There are no minimum balances, loading fees or credit checks required with this card.

Free direct deposit is also available for this teen debit card if it is more appropriate. For example, teens with summer or after-school jobs can have their paychecks deposited directly into their Current Card accounts.

Setting Limits

The most unique feature of the Current Card from Discover is the ability to set myriad parental controls so parents can monitor and control their teenagers’ spending habits. The available controls include:

• Spending Limits:
  Parents can decide how much money their teenagers can spend in a given period of time. If the teen tries to exceed that limit, the card is declined.
• Shopping Categories:
  With cash or other teen credit cards, teenagers can spend their money wherever they wish. This isn’t the case with the Current Card, as parents can restrict certain shopping categories, such as tobacco or liquor stores or hotels.
• Activity Alerts:
  In addition to letting parents decide how teens will use the Current Card, this card also informs parents of purchases and withdrawals. Messages can be sent via text message or e-mail.

Other Perks

The Current Card comes with the same convenient perks you might expect to find in other teen credit cards, such as no liability for fraudulent purchases. Card holders can withdraw cash from the card at any ATM if they are unable to use the card itself, and the card also comes with exclusive discounts at many favorite teen shopping destinations.

There are seven available designs for the Current Card from Discover, which makes it particularly attractive to the younger market. Teens can not only learn to manage their finances, but do it with a sense of style.

Steve Thompson

The Pantone Fall 2009 report takes the most fashionable colors of the season and interprets them for the world of print advertising. But it’s not only fashion and graphic designers who are taking note. This season’s top credit and debit cards are stylish, fashionable and functional - we’re staying economically wise by only rating prepaid debit cards. Here’s a roundup of the top five credit (debit) card designs for fall 2009:

#5: MetroPCS Prepaid Visa Card

The MetroPCS Prepaid Visa Card is a bold, two-color card designed with purple and “burnt sienna” from this season’s Pantone report. It’s a simple, eye-catching design that can be a good match for both male and female card holders.

#4: AccountNow Prepaid MasterCard

The futuristic design of the AccountNow Prepaid MasterCard may be a good fit for the tech-savvy cardholder looking for an edgy, fashion-forward look. The color combination on this card includes “majolica blue” from the Pantone color lineup that inspires “a sense of smoky calmness.” This card has a combination of blues, grays and black that may be a good match for both male and female cardholders.

#3: Facecard Prepaid MasterCard

“Warm olive” is a popular color for fall 2009, and the Facecard Prepaid MasterCard is a single-color credit card designed in this simple, eye-catching color. The light green tone can be a good match for both male and female cardholders.

#2: BabyPhat

For cardholders interested in a celebrity-inspired design, the BabyPhat card offers plenty of style with its slinky BabyPhat feline logo and its famous BabyPhat pink hue that has been named “rapture rose” on this fall’s Pantone color report. The card will help you make a bold fashion statement during any shopping trip, and can be a stylish addition to any fashionista’s wallet.

#1: Current by Discover

Current by Discover is designed exclusively for teens and their parents, and cardholders can choose from one of seven attractive designs. Parents have the freedom of setting spending limits and restricting use in unwanted shopping categories, but teens can choose from a variety of stylish designs that best suite their personality. Design choices include a pink skull and crossbones, dance club scene, blue and white stripes, silver eagle wing or goth design, green and white skull and crossbones, a rainbow retro look and a cityscape.

Credit card companies are bringing us some fresh and stylish designs to dress up our wallets and to show off our sense of style this season. From celebrity-inspired cards to simple, sophisticated designs, cardholders of all ages can choose from a variety of fresh new styles for fall 2009.

Sabah Karimi

Holiday shoppers need to watch out this year for yet another red flag that might indicate fraud. Gift cards purchased with stolen credit cards have been sold online as a tool for money laundering.

Picture this: Your credit cards are stolen. The thief then uses your credit cards to purchase gift cards from Wal-Mart, Target or any other store. He doesn’t want to actually use those gift cards because they might have been flagged as fraudulently purchased, so he sells them on eBay or Craigslist or any other Web site for a discount off the actual face value of the cards.

Consumers think that they’ve found a hot deal when they purchase a few gift cards at 50 percent of their value, but are shocked to discover that the cards are useless. The original card holder has reported his credit cards stolen, which has subsequently flagged the gift cards. If you fall into this trap, you’ve just put money in a scam artist’s pocket.

The beauty of this scam is that regular consumers with no thought of deception sell gift cards every day. They receive cards from stores where they are unlikely to shop, so rather than letting them go to waste, they sell them at a discount online so they at least walk away with some money they can use. So how can you tell the scam artists from people who just received gifts they didn’t want?

A big red flag is the sale of numerous gift cards at once or over a short period of time. This is a serious indicator that the seller is using stolen credit cards to fund his sales, and you should at least consider that he might be into money laundering. Check out the seller’s past history if you’re using an auction Web site such as eBay, and stay clear of him if most of the previous sales have been gift cards.

Money laundering might also be afoot if you find gift cards for sale that are significantly discounted. Since the seller is using stolen credit cards, he wants to dump the gift cards as quickly as possible. To facilitate the sales, he might mark them down by as much as 75 percent; why would a legitimate seller take that much of a hit?

This holiday season, you might be better off paying full price for gift cards at individual retailers rather than purchasing them online. Stolen credit cards are a serious problem in this day and age, and you don’t want to help money-laundering scam artists — even unwittingly — to line their pockets.

See also: Online Resale of Gift Cards Raises Fraud Alarms, ABC News

Steve Thompson