New Gift Card Rules LIVE!!

I’ve always been fond of gift cards.  Some people think they’re thoughtless…a lazy man’s gift.  I disagree. I love the flexibility of being able to get what I want, when I want.  And, if I don’t like the gift I have nobody to blame but myself.  Regardless of your opinions regarding gift cards, they just became the gift that will keep on giving for at least five years.

The new gift card rules, pursuant to the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (the CARD Act) went live August 22, 2010.  This is good news because all of the gift cards you gave or received this past holiday season are protected by the new rules.  A summary of your new gift card rights follows…

– The new rules apply to retail store cards and cards with a “network” logo.  The networks are Visa, MasterCard, Discover and American Express.  So, if you’ve got a card with one of their logos OR if you’ve got a card that can be used at a specific store or chain of stores then the new rules apply.

– Expanded Life of the Cards – This is good news for me since my gift cards are now sitting on my dresser collecting dust.  Your gift card cannot expire for at least 60 months from the date of purchase and any funds on the card the post date expiration are good for another 2 years, although you may need to request a replacement card to use the really old funds.  And, if you have been given a card that can be reloaded with more money (a stored value card) then any new funds are also good for at least 60 months.  This protects you in case you lose your card but find it years later.

– Some Fees are Controlled – Fees can still be charged against your gift card but only if you haven’t used it for 12 consecutive months.  This applies to inactivity fees, transactions fees and maintenance fees.  The fee restriction and the longevity rules are not great news for retailers or the issuing banks.  Consumers have less incentive to use their cards sooner rather than later.  And, publicly traded companies who issue the cards cannot claim the revenue until the card has been used.

– The rules do not apply to pre-paid debit cards or rewards cards – One of the reasons pre-paid debit cards are being pushed so hard by financial institutions is because the aforementioned protections do not apply.  It’s the same reason small business cards are being pushed so hard…no CARD Act protections.

–  Issuance Fees are Still Allowed – You can still be charged a fee when you initially purchase the card.  And, if the card is lost or stolen the holder can be charged a replacement fee.

John Ulzheimer, who really loves gift cards, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.

Categorised in: Credit Cards, Financial

This post was written by John Ulzheimer