Survey Says Many Consumers are Not Aware of Gift Card Fees
A recent study found out that most United States consumers are not aware that several general-purpose gift cards are subject to monthly fees and have expiry dates. This is what the Consumer Federation of America (CFA) revealed in a survey which they released yesterday.
General purpose gift cards are used by consumers to make purchases at various retail outlets. Most of them are issued by Visa Inc. (V), MasterCard Inc. (MA) or American Express Co. (AXP). CFA projects that those companies, along with other minor card issuers, would make $4 billion in profit through general purpose gift cards alone by charging each plastic anywhere from $4 to $7. Some companies also charge monthly fees on gift cards which are not used yet, as high as $4.95 that are assessed six to 12 months after the card is bought.
In the survey conducted by CFA between October 16 and 19, only 33%, or one-third, of 1004 adult respondents knew how much each plastic costs. Fifty-four percent say they had no idea about potential monthly costs.
The federation also found out that 10 percent of plastic gift values are never used and another 10 percent is lost through monthly fees.
Several consumers noted that value of their gifts had diminished over time because credit card companies automatically deduct monthly maintenance or inactivity fees. Short expiration periods are also major reasons why consumers end up never using the plastic they have purchased.
Advocates know that consumers must not pay for something they do not use that is why CFA and the National Association of Consumer Agency Administrators are launching education campaigns aimed at helping purchasers and recipients make the most out of their gift cards.
Both organizations advise gift purchasers pay attention to the card's expiration date and monthly charges. They also tell recipients to use their cards as soon as necessary, within six months if possible. Experts remind recipients that there are stores which do not allow split payment that is, using a gift card and another payment method, such as cash or regular credit cards, to complete a purchase.
CFA and the association of state and local consumer protection agencies are collaborating to distribute brochures which contain tips and recommendations for consumers. American Express also promised to do its part in educating consumers by signing on to distribute 1.5 million copies to its major retailers. Analysts say the credit card giant is taking extra measures to woo consumers, recalling that AmEx just recently cut monthly gift card fees.
Meanwhile, federal administrators advise consumers to know policies thorough and read fine prints before signing up for anything.
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