Gift Cards Can be a Lemon in the Consumer’s Stocking

Holiday gift cards are popular, but can be a lemon in your stocking if hidden fees make them worthless. Hidden “junk” fees can bring the value to zero if not used right away. Read the fine print, or, better yet, spend them now. Here are some of the consumer protections out there:

• (federal consumer protections) The federal Credit Card Act of 2009 prohibits gift cards (store issued or bank issued “gift cards”) from expiring before 5 years from the date of purchase or when money was last loaded onto a card, and prohibits fees for the first 12 months. Stronger state laws remain valid;
• (state consumer protections) In California, for instance, there can be no expiration dates and no fees, with one exception. California permits a $1 per month fee only when the card has a balance of $5 or less, the card has been unused for 24 months, and the card is reloadable.

This law only covers gift cards at a single store or chain. Multiple-use gift cards are not covered. Also, in California, any card with a cash value of $10 or less may be redeemed for cash.