Gift Credit Cards - Avoiding The Problems
Jun 18, 2008 in Uncategorized
Gift credit cards can be useful and much-appreciated gifts, but it is important to understand what they are and how they work, and to check the terms and conditions of your particular gift credit card. Each issuer has different fine print relating to their gift credit cards, and some of the clauses in the fine print can be costly.
Gift credit cards are actually not credit cards in the traditional sense of the word. A holder of a traditional credit card makes purchases on credit, and pays the bill later, when it falls due. A gift credit card is a stored value card, or debit card. A certain amount of money is deposited into the gift credit card by the purchaser at the time the gift credit card is issued, and only that amount of money may be spent using the gift credit card.
If you think about the old-fashioned paper gift certificate still issued by many major retailers, you will have a more accurate notion of the nature of a gift credit card than if you think about credit cards in general.
Some issuers limit gift credit cards to use within the USA. Others will not allow gift credit cards to be used for certain purchases, such as air tickets or hotels. American Express will not issue gift credit cards to the residents of five US states, because, according to American Express, "restrictive legislation" makes it prohibitively expensive to do so.
Check your gift credit card terms and conditions to understand the fees payable. In most cases, it is a costly mistake to keep a balance on your gift credit card for more than a few months. Most providers have expiry dates on their gift credit cards, or start charging relatively costly monthly fees after a particular time period has passed. In some cases, the balance on the gift credit card at the expiry date is simply lost. In other cases, the gift credit card issuer will send you balance by check - less an account closing fee and a check drawing fee which can add up to $30 or thereabouts, and often consume the balance completely anyway.
If you have chosen the right gift credit card, you will be able to give a gift which is as flexible as cash, but as personalised as a gift certificate. If you have received a gift credit card, you have no choice about the issuer, so make sure you read the fine print, so you can avoid any unwanted fees or complications.
Visit Money Talks to find the Top 10 Things To Ask Your Gift Credit Card Issuer.
