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Credit Card Applications » News » Other » Survey Says Many Consumers are Not Aware of Gift Card Fees

Survey Says Many Consumers are Not Aware of Gift Card Fees

December 20, 2009
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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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  • Larry
    With the Virgin / Barclaycard signature offer, there seems to be some consumer deception or maybe even outright fraud goin on.   I decided to jump on this offer..  read all the info on it..  was approved for their platinum card, paid the fee, then was only awarded 10,000 points instead of the advertised 20,000.   When i inquired about the less than advertised bonus points, Barclaycard claims only Signiture Visa cardmembers get the 20,000..  as a platinum cardholder, you don't qualify for that level of bonus, so you get 10k instead.   Well, in their current ongoing promotions, it states plain as day that....    Applicants approved for the Visa Signature or Platinum Card with $49 annual fee will receive 20,000 Bonus Points awarded to your Virgin America Rewards Account at the close of the first billing statement in which you make your first purchase or balance transfer (that is not returned or rescinded) and have paid the Annual Fee on the account (and such fee is not rescinded). They don't mention anything about a separate program for platinum cardholders..  However, trying to get someone to resolve this issue with either Virgin or Barclaycard seems to be rather impossible.. Seems to me they're simply drawing people in with the fraudulent offer, then simply saying, oh, we're sorry you don't qualify..  but thanks for signing up for our garbage credit card with insane fees..   
  • CreditLandCom
    Thank you for sharing your experience with us. We have reviewed this offer and you are correct, nowhere it is mentioned that 20,000 Bonus can become a 10,000 Bonus all of a sudden... We will mention this in our review of this card so others can make an informed decision. Another way to get Virgin miles is to get an American Express charge card: The Business Gold Rewards Card® now offers 50,000 Miles, though you do have to spend $5,000 in the first three months of card membership to get it. It also has $0 introductory annual fee for the first year, then $175. http://www.credit-land.com/details/the-business-gold-rewards-card-from-american-express-open.php Premier Rewards Gold Card now offers 25,000 Miles, though you do have to spend $2,000 during your first three months of Card membership. It also has annual fee of $0 for the first year, then $175. http://www.credit-land.com/details/american-express-premier-rewards-gold-card.php While we do not know If any of these offers make sense to you, we are at least sure that you will get advertised bonus in full if you decide to get them... Conversion rates for Virgin America are: 100 Elevate Points = 200 Membership Rewards® Points All the best.
  • Deborah Ellsworth
     would very much like to start a new credit history  by making payments on time I would tohave a credit card that is NOT PREPAYID! I don't need a card with a high limit just something to start a new credit history. Thank You Deborah Ellsworth
  • Deborah Ellsworth
    I would very much like to start a new credit line to get back on track. I DO NOT WANT A PREPAID CARD!! This new credit card if I am approved does not have to hace a high limit just something for me to start over again and prove myself ThankYou. D Ellsworth
  • Miss Edna
    there is a huge problem with the RFIP chip: it is easily compromised. There are already 'readers' in the form of what looks like a cellphone in a case, that scans all the info in the chip by merely walking near a person -- this 'reader' penetrates leather, cloth, spandex, etc. The only thing it will NOT penetrate is METAL. Perhaps one has seen commercials touting metal credit card cases. Here is my hint for a free fix: cut a piece of aluminum foil or use the foil that is used to keep foods fresh, like coffee. Cut it so that when folded once, it forms a sleeve for your credit card. place the credit card in the sleeve, then place the sleeve in your wallet.
  • Robin Parks
    I am looking to apply for the AARP Visa signature card from Chase that offers $100 after spend $500 in first 3 months, no annual fee and 0% interest first year; I don't want to mail in offer because of having to write in Social security #. Can you direct me to the proper on-line site?
  • CreditLandCom
    The Chase bank cards are not currently available at Credit-Land.com, but you can consider applying for the Citi® Dividend Platinum Select® Visa® Card - $100 Cash Back. The cards has similar terms and cash back program.
  • Becky
    This is Becky Now what do I do just waqit for acard to come to me?
  • CreditLandCom
    Once you have applied, you should receive a letter within 10 business days letting you know if you were approved and when your card will arrive. If you did not receive any letter or notification from the issuer, you should contact them directly. Also, you should contact the issuer if you’ve been waiting for your credit card longer than 30 days. Since we are not a bank and don’t issue credit cards, we cannot give you any information about your application or credit card.
  • SavingStar
    Thank you for posting about SavingStar. Just to clarify one sentence in your article, we have over 5 million members (not 500). Thanks, Josh
  • CreditLandCom
    Sorry for the misprint. We’ve corrected the sentence. Thank you for noticing that.
  • Eric
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