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7 rules for buying gift cards
If you persist in buying gift cards, then at least follow these suggestions:- Don't buy cards from issuers in bankruptcy or on the brink. That's a long and ever-changing list, but you're probably OK with Wal-Mart, Target and the iTunes store.
- Don't rely on hoax e-mails. There's a widely forwarded e-mail purporting to list all the chains that will be shutting down. The versions reviewed by urban legend site Snopes.com contain plenty of inaccurate and outdated information. Such bogus lists might lead you away from a viable store and give you unwarranted confidence about stores that aren't listed.
- Use a credit card. You can submit a claim under the Fair Credit Billing Act if you use a credit card to buy a gift card that later becomes worthless. That doesn't mean a refund is guaranteed, but it's worth a shot.
- Don't assume bank-issued cards are a better choice. These cards have a Visa or MasterCard logo on them and can be used in more places. But the Federal Deposit Insurance Corp. hasn't been clear about whether bank-issued cards retain their value if the issuing bank goes bust. Furthermore, you'll usually pay a fee of $3 to $6 just to purchase one. Monthly fees typically kick in after six months, and there may be a fee for checking the balance or having the card replaced.
- Investigate fees and expiration dates. Cards may have monthly "service" fees, as well as "dormancy" fees if they go unused. Cards can also expire. Find out the fees and expiration dates, and communicate them to the recipient.
- Urge the recipient to use the card quickly. That's especially important if news reports suggest the issuing company is struggling.
- Don't buy gift cards for the elderly unless specifically requested. Many older people have mobility issues that make shopping tough. They may be more forgetful, too, which can lead to lost or unused cards whose value dribbles away. Better bets: gifts of stamps, food, wine or other consumables; a subscription to a magazine; or help with chores or errands.
Liz Pulliam Weston's latest book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.
Published Nov. 24, 2008
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