The Obama Administration’s recent Credit CARD Act, meant to tighten the reins on credit card industry treatment of card customers—and thereby most average Americans— has slowly and steadily begun changing our credit card rates, charges and rewards, the appearance of our statements, and even the number of offers we receive.
But one lesser-known and publicized piece of the CARD legislation is its effect on companies who issue gift cards. The rules, which won’t be fully enacted until August 2010, will affect you if you’re one of the whopping 95 percent of Americans that have used a gift card. From online iTunes stores to the brick-and-mortar department store, there is seemingly a gift card for everything, with gift card purchases now accounting for an impressive portion of all purchases, especially during the holiday season.
Yet despite the one-size-fits-all popularity of today’s gift cards, gift card companies made plenty of money making these cards indispensable for the average consumer, and like its credit card cousin, a commodity that lost value as soon as you bought into it.
The reason? Gift card companies used credit card company tactics to made gift cards the gift that keeps on taking: adding on activation and maintenance fees to the cost of the cards, while in some cases making sure the more time you held on to them, the less value they had until they eventually expired. In short, you bought their card, and, depending on when the card was used, the gift card companies never paid.
While many states took action against gift card companies even before the CARD Act was passed, after August 22, 2010, the new legislation extends additional protections across the nation, including:
Expanding Expiration Dates
With the new CARD Act, now you don’t have to worry about your gift cards collecting dust or being misplaced. Gift cards with an expiration date of less than five years can no longer be sold.
Checking the Charges
Card companies may not charge refund fees for fees for replacing an unexpired card. Additionally “inactivity fees” will be come more “inactive,” as new regulations only allow them to be issued after the card is a year old, and even then a fee may only be charged once per month.
The Gift That Keeps on Giving: Transparency
As of August, gift card issuers must be more actively involved in notifying and educating consumers about fees, charges or expiration dates, as well as providing contact information regarding their ongoing practices.
And remember: If you purchase gift cards or happen to be the lucky recipient of a gift card, take full advantage by using the card in a timely manner and using the full amount. While gift cards don’t affect your credit score like its credit card cousin, it can cause you to lose money without due shopping diligence.
As everyone now knows, there’s normally a heavy price to pay for playing with plastic: the card that’s less of a gift and more of a curse. If you too have been effected by the economy and are wondering how to reduce your card debt and get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.” The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-888-234-4181, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.