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Stuff Your Stockings Fee Free: Gift Card Protections and Regulations

Dec. 20, 2011
Holiday Tips & News, Shopping, Shopping News
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You know you’ve joined the big kid club when a majority of your Christmas presents come in envelopes instead of the giant, gift-wrapped boxes lining the bottom of the tree. Though I wish I could revert back to the days when my Christmas list looked like a Toys R Us catalog, growing up means your priorities may have shifted a little.

Gift cards are a solid choice for Christmas presents because they offer flexibility and allow the recipient to buy whatever they want or, in many cases, need. But, of course, that kind of convenience often comes at a price. Different gift cards come with a number of protections and even fees that are very easy to over look.

Pick a card, any card

There are a number of gift cards on the market to choose from including store, restaurant, bank-issued, prepaid, and rebate cards. The CARD Act of 2009 states that store and bank-issued gift cards cannot expire before 5 years from the date of purchase, and no fees can be charged within the first 12 months. On top of that each state has its own set of protections.

Unfortunately, not all of the aforementioned cards fall under these protections. Here are a few things to look out for when considering gift cards as a last-minute stocking stuffer.

Store/Restaurant Cards

Store and restaurant gift cards can be purchased directly from the retailer, from a supermarket or large retailer, or even with your credit card rewards points. Most banks, including Bank of America and Citi, follow an individual merchant’s protection plans and fees.

When purchased with rewards points, BofA’s gift cards are subject to the individual retailers restrictions and make it very clear that they are not responsible for any lost or stolen cards. Citi gives you the option of returning a gift card, but only if it’s damaged or defective.

Some individual retailers, like Bath and Body Works and Bed, Bath and Beyond, can replace lost or stolen cards if you can provide an original receipt or a gift card number, while others like Amazon, Applebee’s, or Pottery Barn have a strict no-replacement policy.

Bank-Issued and Prepaid Cards

Most of the larger banks offer prepaid cards for purchase and can be used just like a debit card. Chase offers a Visa Gift Card that is valid wherever Visa is accepted. Sounds convenient, but, yep – it comes at a price. There’s a purchase fee of $3.50 per card if you buy at a branch or the cost of shipping if you buy online ($4.95 for standard, $15.95 for express).  There’s also an inactivity fee of $2.50/month beginning 12 months after purchase, and though they offer a protection plan, you must register your card, and you’ll need to jump through even more hoops just to report it.

Citi offers a prepaid card that can be purchased independently or with your rewards points. There’s an expiration date embossed on the card, and there’s an inactivity fee of $3.00/month after the first year if inactive for more than three months. There is no loss or theft protection and comes with a 3% international transaction fee when you purchase anything abroad.

AmEx Gift Card

The AmEx card is in its own league because of all the different options available to consumers. It can be used anywhere AmEx is accepted and can also be purchased independently or with Membership Rewards points. The purchase fee varies from $2.95-$6.95, depending on the type of card. Fortunately, this is your only fee since AmEx recently eliminated all fees after purchase.

AmEx cards are particularly remarkable because even though they have an expiration date embossed on the front of the card, it’s only used when merchants need to reference an expiration date. When the card itself expires, you can just call and ask for a replacement card and your available funds will still be valid. And if your card is lost or stolen, all you need is the card number, CSC, and some additional personal information to replace it.


When you make purchases at some retailers, sometimes you have the option of filling out a form to receive a rebate in the mail. Rebates are tricky because they look like gift cards but follow an entirely different set of rules because it’s essentially free money. The idea of free money sounds too good to be true, and, well, it kind of is.

Expiration dates vary from 90 days to 6 months, and can sneak up on you if you aren’t careful. There are open and closed loop rebates, meaning they can be used anywhere or just at a single retailer, respectively.

The AT&T rebate, for example, is an open loop rebate, so you can use it at stores, restaurants, and even on gas. The catch? For every transaction, they put a hold on your card for the amount of purchase plus 20% to account for gratuity, even if you don’t use it at a restaurant! The account is frozen for that amount for ten days, and although there are no purchase or inactivity fees, they make it difficult to ever use the full amount of your rebate.

Final thoughts

If you plan to work with gift cards this holiday season, make sure you’re familiar with all the expiration dates and fees. Also, always keep track of gift card serial numbers because you’re more likely to get at least some reimbursement when you can report more information. Your best bet is to skip on the plastic and just stick to paper. Cash may have no protection plan, but there are no additional fees, no expiration dates and it’s accepted everywhere.

Gift Card Purchase Fee Inactivity Fee Other Fees Loss/Theft Protection
Chase Visa Gift Card $3.50 at branch; $4.95/$15.95 shipping online $2.50/month after first year n/a Yes, if registered $0 $0 n/a No
Applebees $0 $0 n/a No
Bath and Body Works $0 $0 n/a Yes, with gift card number
Bed, Bath and Beyond $0 $0 n/a Yes, with original receipt
Pottery Barn $0 $0 n/a No
AmEx Gift Card $2.95-$6.95 $0 n/a Yes, with card number
Citi Prepaid Card $0 $3.00/month after first year 3% Int’l Transaction fee No
AT&T Rebate Card $0 $0 n/a Conditional; subject to investigation