State treasurer issues caution regarding gift cards for holiday shoppers

Gift cards are the perfect gift for the person who has everything, the friend who lives five states away, or the shopper who is running out of time and patience!

They can typically be purchased at any price range, for any gift need. In fact, consumers spent an estimated $45 billion on gift cards just last year.

But, before you purchase one, be aware of hidden fees and restrictions that could affect the amount available on the cards.

There are two types of cards available to consumers. One is issued by individual retailers such as a department, discount or local stores. These cards can be used only in the establishment or affiliated member stores where the card was purchased.

More often than not, there are no upfront fees paid by the purchaser or hidden fees paid by you, the recipient or buyer.

The other type of card is issued by banks and normally carries the logo of a major credit card company such as Visa, MasterCard or American Express.

These cards are extremely popular and may be used at any retailer who accepts the credit card. However, many have hidden fees and restrictions such as dormancy fees, balance inquiry fees, and transfer fees.

Even though many of the cards come with brochures and disclaimers, many people are not aware of the fees that will reduce the amount of the gift card.

Be sure to read the fine print when you buy any type of gift card, especially those issued or backed by banks. You may pay $50 for the card and believe that the recipient will have $50 to spend, but that might not be the case.

Ask questions. Can the card be replaced if lost or stolen? Is there a fee for a replacement? What is the cost to check the balance on the card?

Are there restrictions associated with the card? Will the balance be reduced if the card is not used within a certain period of time?

Make sure you and the people you are giving the cards to are aware of expiration dates, fees for non-use and other hidden fees that will affect the value and usage of the gift cards.

Encourage the recipients to use the cards soon. It has been reported that nearly 10 percent of all gift cards go unused. That totals nearly $4 billion lost to consumers.

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