Tuesday, November 30, 2010

Gift Cards and the New Card Act

Christmas past, Christmas present and Christmas future! I love looking back at holiday pix when my babies were babies, that's part of the fun of the season.

Recently, I was on ABC NEWS, talking about the fact that for the past three Christmas seasons, the present at the top of most people’s list is the gift card. While recent surveys indicate that people love to give and get gift cards, this year, gift cards are not just for those who are short on time or scrambling for ideas. In a post recession economy, gift cards can help some families make ends meet for months to come. This year, there’s good news for those in the market for gift cards, the Credit Card Accountability, Responsibility and Disclosure Act enacted last year has imposed new restrictions on gift cards so they are more consumer friendly.

Understanding the new CARD Act rules will help you make the best selection when purchasing gift cards. First of all, there are different kinds of gift cards, so it's important to know the options and how to you decide which card to buy. There are basically two kinds of gift cards and they each have had their advantages as well as drawbacks. The credit card or bank issued cards have the advantage that they can be used almost anywhere, but traditionally, they’ve been racked with fees, including a hefty purchase fee. The other kind of card is a retailer card, which may not have the fees attached, but the obvious disadvantage is that they can only be used at a specific retailer.

Billions Lost in Christmas Past

Over the past several years there have been billions of dollars lost each year. Consumer have lost out because of expiration dates on cards, fees that can deteriorate their worth, and lost or misplaced cards. Plus, some businesses went under and the customer who had not yet finished using their card was out of luck.

CARD Act is Helping With Christmas Present

The CARD Act changed the scene on behalf of the consumer when it comes to gift cards in several ways. For example, gift cards sold after Aug 22, 2010, can’t expire in less than five years. The law also bars issuers from charging an inactivity fee unless the card has been dormant for at least 12 months. In the past, some gift card issuers deducted inactivity fees after only 30 days. Issuers are also barred from charging a fee to replace a lost or stolen card.

Even though these restrictions can do away with a lot of unpleasant surprises, it’s not all smooth sailing, there are still some drawbacks that people should be aware of. The first area is purchase fees. If you decide to give someone a gift card from a credit card or bank, then you need to expect to pay more than the face value of the card. All eight of the general purpose cards included in Bankrate.com’s annual gift card survey charge between $3.95 and $6.95.

Why do credit card and bank issuers charge these fees? What kinds of services do they pay for?

They do pay for a variety of services, including the infrastructure that allows gift card holders to check their balances online. To contrast that with retail cards, none of the 46 retailers and restaurants in the Bankrate survey charge a purchase fee for their gift cards. Some retailers go even further, offering customers a gift or discount with the gift card purchase.

Beware the Ghost of Christmas Future

There are still areas where you should consider the future in purchasing your gift card. While the CARD Act restricts inactivity fees it doesn’t eliminate them. Consumers who allow them to languish for a year or longer could still get hit with fees, which are typically subtracted from the value of the card. Most of the general purpose cards in the Bankrate survey charge a $2.50 per month inactivity fee if the card isn’t used after 12 consecutive months. But this is primarily true for the credit card and bank based cards, not for retailers and restaurants.

Isn’t there suppose to be full disclosure at the point of sale for any kind of gift card and how do you decipher these disclosures, they can be really confusing?

All of these disclosures, as mandated by the CARD act are now suppose to be on the back of the gift card itself. The info is supposed to include fees, expiration dates, and a toll free number. In July, though, Congress agreed to extend the disclosure deadline until Jan 31, 2011 for gift cards produced before April 1st. So this holiday season consumers won’t get in on that part of the good deal. This is because Congress granted a reprieve. You would think it would be a good idea, especially during the holidays, to have full disclosure for the consumer. But the gift card industry would have had to destroy 100 million gift cards, which might have had a negative trickle down effect for the industry, and would have also made it virtually impossible for card manufacturer’s to meet retailers’ order in time for the holidays. So be aware of the fact that the cards you buy this holiday may have some outdated information on them. You can find the correct information through websites that the retailer will give you as well as signage and advertisements.

Ellie Kay
"America's Family Financial Expert" (R)

Friday, November 12, 2010

Thanksgiving Family Tradition - Our Thankful Tree

There are some family traditions that are passed along from generation to generation. Then there are others that we establish for ourselves.

Well, it's time (again) for the 22nd annual "Kay Thankful Tree"!

Yes, for over two decades now, we have been collecting the following statement from our friends and family:

____________________(state your name) is thankful for __________________.

We print your message on a "leaf" and tape it on to our "Thankful Tree." At the beginning of November, the tree is bare, but as the season goes on, it gets full of your thanks. We then save each leaf and put it in an envelope marked 2010.

The photo here was our family featured in Woman's Day magazine from a decade ago. The photographer took 8 rolls of film just to get this one shot. There was an entire roll, where Joshua (the youngest) was missing and we didn't notice. We found him in the other room, playing with his army men because he was bored with the photo shoot.

We have leaves from way back when Daniel was thankful for his dinosaur, Philip was thankful for his red blankie, Bethany was thankful for flowers, Jonathan was thankful for his pacifier and Joshua was thankful for his sword!

So please don't forget to add what you (individually or as a family) are thankful for this year!

Ellie Kay