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Gift cards are convenient, but can have glitches

By Sharon Omahen
University of Georgia

Gift cards have become popular options for the holiday season and other gift-giving times. But a University of Georgia financial expert warns gift card givers to read the fine print before buying and giving gift cards.

"Different cards come with different terms and conditions related to fees, expiration dates, where you can use the cards and what happens if cards are lost or stolen," said Michael Rupured, a UGA Cooperative Extension financial specialist. "Gift cards are definitely not all created equally. There can be some big differences from one card to another."

Less than your money's worth

Some gift cards actually cost more money than what they're worth, he said. For example, a $50 gift card can cost $55.

"So you've lost $5 from the purchase fee right off the bat with this type of gift card," he said. "Typically, these are the gift cards that can be used at multiple locations."

Gift cards purchased directly from a retailer are usually offered at face value, he said. But they may have different charges associated with them.

The card recipient can be charged for not using their gift card, too.

Fees, fees, fees

"Some companies deduct a nonusage fee starting about six months after the date the gift card was purchased," Rupured said. "This is a concern, because many people set gift cards aside and forget about them. And this fee will continue to be subtracted from the card until its value is depleted."

Per-use transaction fees are another possible drawback to using gift cards, he said. This fee is deducted from the gift card if the entire amount isn't used in one transaction.

Rupured said the face value of some gift cards can even be reduced by a fee that's charged when you call to check the card's balance.

"All of these fees and terms should be disclosed, perhaps on the card itself," he said. "But more often, the fees are explained in a separate document, on a Web site or from a toll-free number."

Just like cash in many ways

Gift cards work just like cash. When you make a transaction, that amount is deducted from the amount on the card.

And, just like cash, if you lose a gift card, the person who finds it can pick it up and use it.

For safety sake, Rupured says, write the gift card's unique number on your receipt. Then attach the receipt to the gift card.

"They already know how much you've paid, and now they'll have the information they need to replace it if it's lost," he said. "And they have the detailed information on any possible fees, too."

As long as you pay attention to the terms, he said, gift cards can be useful.

"A lot of retailers don't charge any fees for using their gift cards," he said. "And if you have family or friends in different cities, you can buy a gift card from a major retailer. Just check with them to make sure they have the same retailer near by."

Gift card tips

To make sure the $25 you spend on a gift card is actually a $25 gift, then, (1) be sure you understand the terms, (2) keep the receipt and write down the card number in case it's lost or stolen, and (3) give the receipt with the gift card so the recipient will know how to use it to get its full value.

"If you're still leery of gift cards, it might be a smart idea to just give a personal check," Rupured said. "There are no fees associated with it, and recipients can get the cash and use it anyway they like."

(Sharon Omahen is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.)

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