Gift Giving Guy

When selecting gift cards, steer clear of the bank gift cards — the ones with the Visa, MasterCard, Discover or American Express logos. While these cards may offer wider acceptance, the expiration dates and non-usage fees may sap the value of your gift. Note that bank gift cards differ from retail gift cards issued by national chains such as restaurants, department stores, electronics sellers, and clothing stores. Many of these retailers have responded to consumer concerns, eliminating fees and expiration dates. I enjoy giving these kinds of retail gift cards.

Let’s take a bank gift card example that I found in one of my MBA textbooks this semester. A chapter on rewarding employees featured a MasterCard print ad (pictured above) promoting a bank gift card. Organizations buy these “Best Present” MasterCard debit cards from thegiftcard.com then give them to employees as incentives. For the gift MasterCard, the card purchase fee is $4, which is comparable to other bank gift cards (usually ranging from $3.95 to $6.95). Unlike many retail gift cards, bank gift cards need an expiration date. The expiration date, usually two years, allows the card to work with the merchant terminals found worldwide. But this gift MasterCard also has an “activation” period of six months. If six months pass, the card balance loses $10 to an inactivity fee, then another $3 each month as a maintenance fee until the card’s value is gone.

Other consumer bank gift cards behave similarly.

• The Giftcards.com Visa Debit Card expires after two years. The card requires a $4.95 purchase fee, a maintenance of $2.50 per month (six months after activation), and a separate 35 cent charge for each purchase.
• The Discover Gift Card also expires after two years. Discover levies a $3.95 purchase fee and a dormancy fee of $2.50 per month after 12 months of non-use.
• The GiftCertificates.com MasterCard Gift Card lasts for about three years and applies a $1 shipping fee. A service fee of $2 per month kicks in after 12 months.

In the U.S., please note that states have varying laws that govern gift card expiration. State laws either abolish expired card values or direct some or all of the card value to the state as unclaimed property.

If you buy a retail or bank gift card, be sure to include a purchase receipt in case the card is lost or stolen. Many retail gift card providers will reissue the card for free with proof of purchase. Bank gift card companies may charge you between $5 and $15 for replacement cards.

The guideline for buying any gift card: Check the terms on the card packaging or on the card’s web site. If you don’t see the rules or can’t decipher the legalese, don’t buy the gift card.

And if you receive a bank gift card as a gift, spend it quickly.