photography by giantOne
As gift cards have become increasingly popular in recent years, so has the hidden fees charged against unsuspecting customers. Gift card fees are typically listed on the back of the card or on a separate sheet of paper that must be given to you when you purchase the card. They can also be found on the merchant’s website. However, many gift card buyers do not read the fine print on the card and end up paying a steep price in fees. Before you buy your next gift card, be sure you understand all the fees that come with the card and when they are assessed. Below are the different types of gift cards fees:
Initial Handling or Issuing Fee: This type of fee is popular with bank issued gift cards (e.g. American Express, Discover, MasterCard and Visa) and comes in the form of a flat fee charged when the card is purchased. The fees can range from $2.95 to $10.95. Since these cards can be used anywhere, consumers are charged the issuing fee for this convenience.
Dormancy Fee: Some merchants charge a dormancy fee for not using the card within a certain period of time. Dormancy fees can be charged monthly, semi-annually or annually. The fees typically begin after the first 12 months of purchasing the card and continue until the balance of the card reaches zero. Dormancy fees result in a gradual decrease in the value of the card over time.
Renewal or Replacement Fee: This fee is assessed when the card is reissued or replaced. For example, the Wells Fargo® Visa gift card charges a $7.50 fee if the card is reissued or replaced. Treat your gift cards like cash and store them in a safe and secure place to avoid paying reissue or replacement fees.
Shipping Fee: Certain gift cards purchased online come with shipping and handling fees which can range from $2 to as much as $20 for express shipping. In addition, some merchants charge an additional fee for the convenience of buying gift cards online.
Special Fees Charged by Banks: In addition to the fees outlined above, bank issued gift cards come with special fees, including Transaction or Statement Copy fee (charged for requesting a copy of gift card transactions or a copy of your gift card statement, typically $5), Foreign Currency Conversion Fee (charged for using your gift card to make purchases outside the United States, typically 3% of the purchase value in U.S. Dollars), Check issuance fee (charged when you ask the bank to send you a check for the rest of the gift card balance, typically $15), and Transaction fee / Balance inquiry fee (charged for point of sale (POS) and POS balance inquiry)
A number of states have begun taking action to limit and in some cases eliminate gift card fees and expiration dates. Check your state’s consumer protection website to see if your state has passed legislation on gift card fees and expiration. If your state is not one of them, stay tuned, because it may not be too long before they do.
Click here for our Gift Card Guide where you can search and compare gift cards, including those that do not charge fees. You can also see our ratings on each gift card.