Gift credit cardsGift credit cards are currently taking the world by storm. But are they really the perfect gift? Read on . . . There are many reasons for the popularity of gift credit cards: 1. Convenience: Most of them are branded by VISA or other major issuers and can be used anywhere a debit card can be used. This is much more convenient that a store gift card - are you really sure your secretary shops at Target? 2. Flexible: Typical denominations range from $10 to $500. The Bank o0f America goft card goes all the way for $2,500, and can be used for even the most extravagant corporate gift giving. This is an advantage over the same old same old typical $25 or $50 traditional gift card formula.
4. Expressive: The "choose a design" option provided by some issuers lets you do things to personalize the card. This ties into both point 3 above and point 5 below. They also often come with a choice of messages, for example "Great job", "Have fun", "You've earned it", "Happy Holidays", and so on. 5. Branding and PR: The ability to include a company logo on business gift cards, such as those offered by Bank of America, is a great way to promote your business. 6. Accessibility: For those with a below average FICO score, a gift card can make the convenience of a credit card available again. So how do these VISA gift cards etc work?
Often people are confused about the difference between credit gift cards and traditional prepaid credit cards such as the RushCard or BabyPhat. Usually the main difference is that the gift card is non-reloadable. Instead of being able to top up the card's balance, the card has an initial value decided on by the purchaser/gift giver. However, this DOES NOT mean you can only use the card once. Although you cannot add funds to the card, you can use it as often as you wish, until the value of the card reaches zero. Each time the card is used, the value of that particular balance is taken off the balance. WONDERING WHAT THE DOWNSIDE IS? 1. Even well recognized cards like American Express, MasterCard or Visa gift cards may have restrictions such as not being able to use them to buy an airline ticket or rent a car. Some, such as the Bank of America gift Visa cards, cannot be used at an ATM or to get "cash back" from a store when shopping. 2. Another issue is expiration dates. The fine print around expiration dates MUST be checked as some cards lose all their remaining value upon expiration date. So if you don't spend fast enough, the balance on the card is wasted. For example, the Bank of America Visa gift cards expire after 9 months and unused funds are forfeited. 3. And here comes the BIG ONE - FEES! These vary between issuer. The Bank of America fees are steep because their cards are intended for corporate users, not individuals. To order a single card from BOA includes a $5.50 purchase fee and a $20 express delivery fee. Individuals may purchase an American Express gift card online and for $3.95, with a shiping fee of between $5.95 - $15.50, depending on the delivery option selected. A $2 monthly service fee is charged after the first year. The American Express cards come with a $500 limit, so if you buy one $500 card you will pay $9.90 in fees, or nearly 2%. However, buy a $50 card that costs you $9.90 and you are paying nearly 20% of the value in fees. Think about that in terms of APR and let your blood run cold! ALL of the gift credit cards I researched had replacement fees for lost or stolen cards - usually around $7.95. Discover more at the Visa Gift Credit Cards home page.
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