These days, when you buy a gift certificate at a store that you like, you're not likely to actually get one of those paper certificates that they used before. These days, you get plastic. The credit card companies must have looked at what the stores were doing, and thought – hey, that's a fine idea. It isn't a good idea to tie a gift receiver to a specific store if you want to give them a gift certificate, they feel. Why don't you just give them a temporary card that's prefilled with a certain amount of cash? With this in hand, they can go anywhere and do anything.
"Stored-value card" is technical name that they use for prepaid gift cards. If you don't know what you want to give someone, why, if you don't even know what kind of store you should get a gift certificate from, what you can just buy one of these prepaid gift cards, load it with $25 or $50 or whatever you wish to give them, and there you go. It's a great idea, and people don't have to worry about having to return gifts anymore.
There's just one little problem – any time you use the services of a financial services company of any kind, they seem to think that they're doing you a huge, huge favor. They feel they can charge you a real hefty fee to sell you these cards. If you can overlook this, these certainly are a great idea.
Gift cards have been around for quite a while now, even if they haven't really been used as traditional gifts. Employers have often used these in the past to hand out incentive rewards to their employees. They even sometimes give them out to valued customers. It took the banks a while to see what was going on. Bank of America (an institution that's addicted to fees, as we all know) was the first one. They began putting out special prepaid gift cards for every occasion they could think of. And then, when the other banks began to see how successful they were, they jumped on the bandwagon as well. They sell millions of these cards now. They are about the most popular gift.
There's the matter of how much you need to pay in fees, of course. For anything up to $300, you usually pay a $6 fee. On average, for up to $500, you pay about $5 or $6 in fees. Different card brands charge different amounts. If it's a $50 card, the fees take a 10% bite out. That's pretty steep. It doesn't end there.
Let's say that you receive a card, but you would rather have cash. If you ask the bank for the cash, they'll charge you $15 for it. They call it a closure fee. Sure, you can just go to the ATM and take out cash. you o that though, that'll be $5 per transaction. And then of course, there is an expiration date. If you don't spend your money by then, you'll need to shell out an extra service fee of $2 or $3 to have your validity reinstated. The bottom line is that people would really save a lot more money if they just used cash or checks. But there's a certain grandness that is associated with giving someone a card. And for that, perhaps one considers the fees worth it
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