subject: Are Bank Issued Gift Cards All They Are Cracked Up To Be? by:Stefan Hyross [print this page] You almost certainly have seen gift cards being sold at many of the major retailers. They can be purchased in values as small as ten dollars all the way up to hundreds of dollars. A lot of people buy them because they can be redeemed for anything that that store or chain sells. They are a great way to give person a present that you know they will love since they will be the ones choosing it. However what do you do when you are not sure where the person on your list is going to shop? That is where banks have stepped in to sell their own kind of gift card.
A bank authorized gift card is virtually identical to a regular gift card except for the fact that it may be redeemed in any store that accepts credit cards electronically. However before you run out to obtain one of these cards there are a few downsides you need to be mindful of.
When a retailer issues you a gift card they receive money without having to provide you any product at that time which is why many stores sell them. You are essentially offering them a free loan. It also has the added benefit for the business that a certain percentage of gift cards never get redeemed. For the majority of cards that are redeemed shoppers frequently spend substantially more than the card's denomination which helps to boost sales. All of this has aided to give rise to an industry that doesn't just create the plastic cards but also accessories such as gift card holders and a huge variety of clever gift card packaging to give it the feeling of a more complete present.
Banks monitored these trends and made the decision to get into the segment themselves. However you need to understand that they are not exactly the same as retail gift cards. Contrary to a retail card, bank authorized cards often have an additional purchase fee tacked on. This means that you can expect to shell-out $55 for a gift card that has a denomination of $50.
Many bank issued cards also come with an expiry date. Many areas of the country forbid expiry dates of ordinary retail gift cards. However you could come across other fees that can eat away at your card's balance. It is not unheard of to have a monthly maintenance fee that is charged once your card is activated. Although they most likely have a grace period of a few months. And be careful if your card is lost or stolen since there could be a hefty replace cost.
With regular cards if a store or retail location goes bankrupt, however, a gift card for that store may no longer be of any use. The same is true for bank authorized cards. Despite the fact that a card is backed by a major credit card company, if the issuing bank goes out of business the card could no longer be worth the plastic it is printed on.
Despite all of the negatives a bank authorized gift card may still be a great and flexible way to send someone a present. As with any purchase it is always advisable to do your research and understand what your are buying.
About the author
Stefan Hyross writes on behalf of Gift Card Occasions which specializes in gift card holders for both corporate and retail companies. Please visit the site to view the entire line of unique gift card packaging for all occasions.
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