Avoid Fee-Laden Bank Gift Cards

       A gift card looks like a good deal all around. Plunk down some cash and deliver a present that's universally useful and easy to wrap and send through the mail. And the recipient has a gift that never has to be returned because it's the wrong color or size. But Consumer Reports Money Adviser (CRMA) warns in its December issue that some gift cards come with fees and expiration dates that can take gift givers and recipients by surprise.
       The report looks at both store-issued gift cards and bank issued gift cards, which carry a Visa or MasterCard logo or are issued by American Express. Cards issued by retail stores have improved thanks in part to consumer complaints and pending legislation; bank gift cards are another story.
       Bank gift cards may appear to be more convenient, since they can be used anywhere the card of the same brand is accepted. But the report cites a study by the Montgomery County (Maryland) Divison of Consumer Affairs, which found many bank gift card issuers levy fees ranging from $3.95 to $11.95 just to purchase the gift card. The four bank-issued cards reviewed in the study also charge replacement fees ranging from $5.95 to $10.00. And all had expiration dates and monthly maintenance fees.
       According to CRMA, the stores with the most consumer-friendly gift card policies were Best Buy, Borders, Circuit City, CompUSA, Costco, Gap, Hecht's, Home Depot, JC Penney, Lowe's, Nordstrom, Old Navy, PetsMart, Sam's Club, Sears, Sports Authority, Starbuck's, Target, and Wal-Mart.
       CRMA offers the following advice for givers or recipients of gift cards:

Check on expiration dates and fees. This information can usually be found on the card itself, on an accompanying sleeve, or on the issuer's Web site. If you're the giver and you think the rules are too restrictive, don't purchase the card.
Stick to store cards rather than bank cards if you're buying. Store cards don't usually charge up-front fees, and out of 30 surveyed, only some charged non-use fees and only one had an expiration date.
If you receive a bank-issued gift card, use it immediately. Delaying gratification with credit card-branded gift cards can cost you money, so spend it before it erodes.
Consider a cash gift. It's accepted everywhere, appreciated by everyone, never expires and carries no extra fees.

A free highlight of CRMA's report on gift cards is available as part of the free Holiday Giving Guide on www.ConsumerReports.org.