You almost certainly have seen gift cards being sold at many of the major stores. They can be purchased in values as small as ten dollars all the way up to hundreds of dollars. A lot of people use them because they can be put towards anything that that store or chain sells. They are a fantastic way to give someone a present that you know they will love since they will be the ones choosing it. That's fine if you know what place that person likes or often goes to, but what if you don't? That is where banks have come in to offer their own brand of gift card.
There are gift cards that are valid for virtually any item and may be used at almost any store but are issued by the banks. However before you go out to get one of these cards there are a few downsides you should be mindful of.
When a store issues you a gift card they receive money without having to provide you any product at that time which is why most stores sell them. This amounts to an interest free loan. From all of the gift cards that are purchased a certain percentage will never be cashed-in and that amounts to free money for the store. For the majority of cards that are used consumers often spend substantially more than the card's denomination which helps to boost sales. All of this has aided to give rise to an industry that doesn't just create the plastic cards but also adornments like gift card holders and a wide variety of clever gift card packaging to give it the feeling of a more substantial present.
It's no wonder that banks decided to get some of the action. While these cards look and act like ordinary gift cards there are a few key differences. Unlike a retail card, bank authorized cards usually have an additional purchase fee tacked on. So if you wish to buy a $50 gift card it may cost you $55.
Many bank issued cards also come with an expiry date. Many areas of the country ban expiry dates of ordinary retail gift cards. However you could run into other fees that can eat away at your card's value. Many banks charge a monthly maintenance fee which gets deducted from the remaining value of the card monthly. Although they most likely have a grace period of several months. And be careful if your card is lost or stolen since there could be a hefty replace cost.
There is some concern recently that if a store goes out of business any remaining gift cards would be worthless. The same is true for bank authorized cards. Many people see a major credit card company's name on the gift card but it is the issuing bank that is responsible for its value and if that financial institution collapses so to does the gift card's value.
Despite all of the negatives a bank authorized gift card are still be the best and most flexible way to send someone a present. As long as you and the person you are giving it to are informed about all of the fine print.
Stefan Hyross writes on behalf of Gift Card Occasions which provides gift card holders for both corporate and retail companies. Feel free to visit the website to view the full line of unique gift card packaging for every occasion.
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