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Sunday, October 3, 2010

New Rules for Prepaid Gift Cards

If you're lazy like me, you hate searching for just the right gift to give someone. I have to plead guilty to the fact that I have contributed to the growing gift card trend. But, I have not liked certain hidden penalties associated with some gift cards. Happily, some of those penalties no longer exist, or at least are not as bad.

For some gift cards sold since August 22, 2010, new rules imposed by the Federal Reserve are in effect:
  • Limits on expiration dates - The money on a gift card must remain available for at least five years from the date the card was purchased or additional money added. 
  • Replacement cards. If your gift card has an expiration date, you still may be able to use unspent money that is left by requesting a replacement card.
  • Fees disclosed. All fees must be clearly disclosed on the gift card or the package it comes in. 
  • Limits on fees. Card fees typically are subtracted from the money on the card. These fees are now limited and can be charged only if
    • you haven't used your card for at least one year, and
    • you are only charged one fee per month.
    These restrictions apply to fees such as:
    • inactivity fees for not using your card,
    • fees for using your card (sometimes called usage fees),
    • fees for adding money to your card, and
    • maintenance fees.
You can still be charged a fee to purchase the card and certain other fees, such as a fee to replace a lost or stolen card. Be sure to understand the rules before you buy.

These rules do not apply to all prepaid cards. Go here to see which cards are covered and which are not. You'll also see more details about the rules: Federal Reserve Bank New Rules for Gift Cards.

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