When gift cards turned plastic, they seemed like the perfect present – convenient, easy to keep track of, and flexible for the recipient. But some gift cards – especially those issued by credit card companies – have been charging fees for card value unused after a certain point.
American Express: No More Dormancy Fees
Whether or not the move is part of a reaction to government attacks of credit and debit card fees is not clear, but American Express has announced that it will no longer charge monthly fees for gift cards that go unused.
On its website, AmEx announces that the elimination of monthly fees began September 30 and applies to all gift cards – those in stores, online and already in people’s wallets. Taken alone, this is good news. But American Express’s move may not cause others in the industry to follow.
- Visa cards are more widely accepted among retailers, which means that they may not feel motivated to adopt a similar no-dormancy fee policy.
- Chase cards come with a monthly fee of $2.50 beginning a year after the card is issued. The company hasn’t made any announcements about fee changes.
- American Express cards still cost between $2.95 and $6.95 to purchase and activate.
Struggling with credit card debt? It may be time to consider bankruptcy as an option.
Credit Card Reforms and Gift Cards
The recently passed Credit CARD Act, which will bring various credit card reforms early next year, also has some provisions that will regulate gift cards. These include:
- Dormancy fee limits: Inactivity for at least one year is required before card issuers can charge dormancy fees to a card.
- Fees on packaging: Issuers must “clearly and conspicuously” identify all activation and other fees on the packaging of the card.
- Bans on early expiration dates: Gift cards will be prevented from expiring within five years of their issue.
Take Home Lesson: Proceed with Caution
If you’re interested in giving gift cards to your loved ones, consider getting store-specific cards, which generally don’t have activation fees or dormancy fees. Further, you can rest assured knowing it will be accepted at the outlet you have in mind.
Tags: American Express, bank fees, gift cards
This entry was posted on Saturday, October 10th, 2009 at 2:02 pm and is filed under Finance 101: Secure Your Future. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
This is an outrage. Give your family cash! or presents. Ridiculous!
Store specific gift cards are certainly a viable option but with American Express relinquishing their fees for gift cards I think that these will become a lot more popular.
Visa gift cards are definitely the most popular as we sell a lot of them!
Ben