Are Bank Issued Gift Cards All They Are Cracked Up To Be?
Gift cards are a common sight in many of the retail stores today. They are often found near the cash register and in various values. Most people buy them because they can be put towards anything that that store or chain offers. They are a fantastic way to give someone a gift that you are sure they will love since they will be the ones choosing it. That’s fine when you are familiar with what place that person likes or often frequents, but what if you don’t? This is where banks have stepped in to offer their own kind of gift card.
A bank authorized gift card is essentially identical to a regular gift card aside from the fact that it may be redeemed in any store that takes credit cards electronically. But before you run out to obtain one of these cards there are a couple of downsides you should be aware of.
When a store issues you a gift card they get your money without having to hand over any product at that time which is why many stores like them. This amounts to an interest free loan. It also has the added appeal for the business that a certain number of gift cards never get used. For the majority of cards that are used shoppers often spend substantially more than the card’s value which helps to increase sales. Today an entire industry has been spawned that not only supplies the cards but also a wide variety of gift card holders as well as an astounding array of creative gift card packaging that can accompany it.
It’s no wonder that banks wanted to get in on the action. But you should understand that they are not exactly the same as retail gift cards. Contrary to a retail card, bank issued cards often have an additional purchase fee tacked on. This means that you could expect to pay $55 for a gift card that has a value of $50.
Most bank issued cards also have an expiry date. A lot of areas of the country ban expiry dates of regular retail gift cards. However even if you use the card before it expires you could be hit with additional fees. It is not uncommon to come across a monthly maintenance fee that is charged once your card is activated. This charge is not necessarily activated from day one but can come into play a a number of months down the road. Other fees may consist of charges for the reissuing of a lost or stolen card and charges for live telephone assistance.
There is some concern recently that if a retailer goes out of business any remaining gift cards could be worthless. Unfortunately these bank backed cards are not shielded from this scenario. Despite the fact that a card is backed by a major credit card company, if the issuing bank goes out of business the card could no longer be worth anything.
But bank issued cards still present the best alternative to ordinary gift cards even with its downside. As long as you and the person you are sending it to are aware of all of the fine print.
