Innovative Shopping Rules:
Those shopping for prepaid gift cards this holiday season will do so with a recent law that makes the use of such cards less frustrating.
Not long ago, many of these popular one-size-fits-all presents were subject to periodic service fees, such as inactivity charges and transaction fees. Some had expiration dates that recipients thought were unfairly early. There was no standard rule governing them.
But as of Aug. 22, when the federal Credit Card Act of 2009 took effect, that all changed.
The new law limits fees and extends expiration dates. It targets gift cards with a Visa, American Express, MasterCard and Discover brand logo, those cards that typically included fees and expiration dates. But the law also applies to store gift cards, though they rarely incurred fees.
The act makes using the cards more consumer-friendly, said Jennifer Tramontana, spokeswoman for the Network Branded Prepaid Card Association, an industry organization based in New Jersey.
Here's a look at what the law means to you.
-Fees
Before: If you misplaced a card and found it months later or if you postponed using it till you found the perfect new outfit, much of the funds may have been depleted due to lack of use. Even if you used the card periodically but didn't spend the full amount, service fees likely were subtracted from the funds, leaving a smaller balance than you expected.
Now: Under the new rules, no service fees can be charged until the card has been inactive for 12 months. After that period, the card can be charged only one fee a month.
- Expiration dates
Before: If you misplaced your gift card, it could have expired by the time you found it.
Now: These cards are good for at least five years from date of purchase or at least five years from the date you last added money to it.
- Replacement cards
If you lose your card, you can get a free replacement. Also, if the card's expiration date has passed but it contains unspent money, you can request a replacement at no cost. You must have registered the card to get a replacement.
- Disclosures
All fees and expiration dates have to be disclosed on the card or its packaging. Additionally, a toll-free number and website, for questions and to check balances, must be included on the cards.
- Exceptions
The new rules apply only to prepaid store gift cards (to be used at a certain retailer) and Visa, American Express, MasterCard and Discover gift cards. They do not apply to other types of prepaid cards, including those used as a checking-account or debit-card substitute. Gift cards given as a promotion or reward, such as a restaurant gift card given as a promotion for test-driving a car, are excluded.
User habits vary
The new law is good news to Mesa resident Nicole Cardwell, who said she previously avoided buying Visa or MasterCard gift cards because of all the potential fees. She had once misplaced a gift card; when she finally found it, inactivity charges had reduced the balance.
Those shopping for prepaid gift cards this holiday season will do so with a recent law that makes the use of such cards less frustrating.
Not long ago, many of these popular one-size-fits-all presents were subject to periodic service fees, such as inactivity charges and transaction fees. Some had expiration dates that recipients thought were unfairly early. There was no standard rule governing them.But as of Aug. 22, when the federal Credit Card Act of 2009 took effect, that all changed.
The new law limits fees and extends expiration dates. It targets gift cards with a Visa, American Express, MasterCard and Discover brand logo, those cards that typically included fees and expiration dates. But the law also applies to store gift cards, though they rarely incurred fees.
The act makes using the cards more consumer-friendly, said Jennifer Tramontana, spokeswoman for the Network Branded Prepaid Card Association, an industry organization based in New Jersey.
Here's a look at what the law means to you.
-Fees
Before: If you misplaced a card and found it months later or if you postponed using it till you found the perfect new outfit, much of the funds may have been depleted due to lack of use. Even if you used the card periodically but didn't spend the full amount, service fees likely were subtracted from the funds, leaving a smaller balance than you expected.
Now: Under the new rules, no service fees can be charged until the card has been inactive for 12 months. After that period, the card can be charged only one fee a month.
- Expiration dates
Before: If you misplaced your gift card, it could have expired by the time you found it.
Now: These cards are good for at least five years from date of purchase or at least five years from the date you last added money to it.
- Replacement cards
If you lose your card, you can get a free replacement. Also, if the card's expiration date has passed but it contains unspent money, you can request a replacement at no cost. You must have registered the card to get a replacement.
- Disclosures
All fees and expiration dates have to be disclosed on the card or its packaging. Additionally, a toll-free number and website, for questions and to check balances, must be included on the cards.
- Exceptions
The new rules apply only to prepaid store gift cards (to be used at a certain retailer) and Visa, American Express, MasterCard and Discover gift cards. They do not apply to other types of prepaid cards, including those used as a checking-account or debit-card substitute. Gift cards given as a promotion or reward, such as a restaurant gift card given as a promotion for test-driving a car, are excluded.
User habits vary
The new law is good news to Mesa resident Nicole Cardwell, who said she previously avoided buying Visa or MasterCard gift cards because of all the potential fees. She had once misplaced a gift card; when she finally found it, inactivity charges had reduced the balance.
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