There are Federal Reserve rules in place that provide protection when a consumer purchases or uses gift cards. Below are the key changes applicable to gift cards sold on or after August 22, 2010:
1) The first card type are store gift cards, which can be used only at a group of stores or a particular store, such as a clothing store or book seller.
2) The second type of card covered are gift cards with a Discover, Visa, MasterCard, or American Express logo on them. These gift cards can be used wherever that particular logo is accepted. (Please beware that not all cards with a brand logo are covered; see "Other prepaid cards" below for the exceptions.)
1) There are now expiration dates limits - The funds on a gift card will be valid for a minimum of 5 yrs. from the date the gift card is bought. Any funds that might be added
to the gift card at a date later in time must also be valid for a minimum of 5 years.
2) There are now rules in place for replacement gift cards - If your gift card has an expiration date you still may be able to use any unspent funds that is left on the gift card after the expiration date for the card. A example would be if the card expires within 5 years but the funds may not expire for seven. If your gift card expires and there are funds that remain unspent, you can request a replacement card at no charge. Check to see if expiration dates applies to your card.
3) Fees must be disclosed - All fees must be disclosed in a clear manner on the packaging or on the gift card itself.
4) There are now limits in place on fees - Gift card fees are usually subtracted from the money on the card. Under the new rules, these fees are now limited. Normally, fees can be charged if you haven't used your card for at least 1 year, and you can be charged only one fee every month.
These restrictions apply to fees such as inactivity fees or dormancy for not using your card, fees for using your card (sometimes called usage fees), maintenance fees, and fees for adding money to your gift card.
You can still be charged a fee to purchase the card and certain other fees, such as a fee to replace a stolen or lost card. Make sure you read the card disclosure carefully to know what fees your card may have.
These new rules apply only to gift cards, which are just one type of prepaid card. The new rules do not cover other types of prepaid cards, such as:
1) Re loadable prepaid cards that are not intended for gift-giving purposes - For example, a reloadable prepaid card with a MasterCard, American Express, Visa or Discover brand logo that is intended to be used like a checking account substitute is not covered.
2) Cards that are given as a reward or as part of a promotion - For example, a free fifteen dollar gift card given to you by a store if you purchase services or merchandise of one hundred dollars or more may have fees or an expiration date of 1 yr. rather than 5 yrs. Regardless, you must be clearly informed of any fees or expiration dates for these cards.
For information on protections under the Federal Reserve's other credit card rules please visit their website at http://www.federalreserve.gov
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