Gift Cards Have Become Extremely Popular But Are Bank Issued Cards Just As Good?

You almost certainly have seen gift cards being offered at many of the major stores.  They are often found near the check-out and in different denominations.  Once purchased they can be redeemed at any time for the goods or services that are available at that particular retail location of chain of stores.  This has transformed them into an easy gift idea for those on your list that are hard to buy for.  But what do you do when you are not certain where the person on your list is going to shop?  That is where banks have stepped in to offer their own kind of gift card.

A bank issued gift card is virtually the same as a regular gift card except for the fact that it can be redeemed in any retail location that accepts credit cards electronically.  But before you run out to obtain one of these cards there are a few negatives you need to be aware of.

When a store issues you a gift card they get your money without having to hand over any product at that time which is why many stores sell them.  You are basically giving them a free loan.  It also has the added benefit for the business that a certain percentage of gift cards never get redeemed.  Studies also show that when a shopper does use the card they will often spend more than what the card is valued at which is good for a company's profits.  All of this has aided to give rise to an industry that doesn't simply make the plastic cards but also accessories such as gift card holders and a wide number of clever gift card packaging to give it the feeling of a more substantial present.

It's no surprise that banks wanted to get in on the action.  But you should know that they are not entirely the same as retail gift cards.  Unlike a retail card, bank issued 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 value 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.  But you may come across other fees that can eat away at your card's value.  It is not uncommon to have a monthly maintenance fee that is charged once your card is activated.  This charge is not generally activated from day one but can come into play a a number of months down the road.  And be careful if your card is lost or stolen since there may be a hefty replace cost.

With ordinary cards if a company or retail location files for chapter eleven, however, a gift card for that retailer would no longer be of any use.  Sadly these bank backed cards are not shielded from this scenario.  Even though a card is authorized 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.

Even with all of its criticisms a bank issued gift card may still be a great and flexible way to give someone a present.  As with any purchase it is always advisable to do your homework and know what your are buying.