Sunday, December 6, 2009
New Rules for Gift Cards
Written by: Lisa Matthys
In the season of gift giving, many people struggle trying to find that perfect gift for their friends, family, or significant other. Why go through the heartache of trying to find that perfect gift when you could simply give them a visa or mastercard gift card? Consumers are able to spend it as a gift card but with fewer restrictions on where they can use it. However, the main concern with these type of gift cards is that they charge additional fees for its inactivity, diminishing the amount available.
The Federal Reserve has proposed new regulations aimed at limiting fees and expiration dates of gift cards. The new rules would limit card issuers to charge no more than one inactivity, dormancy, or service fee a month. It would also require funds to be usable for at least five years after a card is issued or last funded. The National Retail Federation expects that the changes will affect banks more than retailers as most retailers have pulled back from expiration dates and other various fees. Also, the new proposed regulation could hurt some state governments who depend on unused gift-card credit from issuers. But these implications will not be in place until August of next year too late for this years holiday season.