Watch For Unwanted Gift Card Fees
With all of the holiday shopping you are likely doing these days, it’s hard to remember what to get everyone on your list. Sometimes, it’s best to go with the easy, simple, tried-and-true gift card as a present. It’s a sure bet that the recipient of the gift will be able to buy what he or she wants without worry that it doesn’t “fit”.
For the most part, the concept of gift cards is a simple one. You buy a card that represents a dollar denomination which is good for that value at whatever merchant issues the card. These are especially popular with restaurants, for example, if you wish to give a loved one the gift of a free dining experience.
Sounds simple enough, and it should be. Generally, the card’s recipient is not required to make any additional payment for the goods or services unless, of course, they amount to a price that is loftier than the denomination listed on the card. However, as QMI Agency points out today, not all gift cards are created equal.
Consumers are being warned against the type of gift cards or prepaid cards that incorporate hidden fees and conditions. The report notes that some gift cards carry with them additional fees that “may amount to 10% of the value of the card”. This is based on a watchdog report released by the Financial Consumer Agency of Canada.
According to this report, there are cases when cash or cheques may be better options than gift or prepaid cards. Some cards, for instance, carry charges like activation fees, purchase fees or replacement fees in the event that the card is lost. Naturally, the fine print should be read before purchasing such cards.
Said the commissioner of FCAC, Ursula Menke: ““Before you buy a prepaid card as a gift or for yourself, make sure you know all the costs and conditions these cards carry. Fees, expiry dates, ease of use, what happens to an outstanding balance, whether the card can be replaced if it is lost or stolen – these are just some of things to consider, and they vary depending on the card.”
Gift cards are often great and easy-to-use gifts. If you are certain that the recipient will be able to take full value of the card, you can assure yourself that it will be a worthwhile gift. However, be careful about buying those cards that may end up charging the recipient in the long run.
As QMI writes, “The FCAC points out that a $50 prepaid card that carries an activation fee of $4.95 means you are paying almost 10% of the value just to use the card.” These are often found in cards that are advertised as temporary credit cards with specific values that may be used just as if they were real credit cards.