Friday, August 27, 2010

Gift Cards: Rip-Off Report

We got married last year and many of our friends gave us bank gift cards. What a scam! During this recession, banks are looking for new streams of revenue, including higher credit card fees, higher interest rates and late fees up the yahoo and now I’ve discovered that gift cards are another way to stick it to the consumer.
If you want to give someone a gift card, why not opt for cash? It spends easier and you won’t get saddled with silly fees. The #1 set of fees devised by the bank geniuses are the non-usage ones. There is a time limit with each card—some offer one year or even less—and if you don’t use the cards right away, you’ll be charged at every turn. One of them charges you $2.50 each month over the standard period. If you don’t use it for quite some time, you’ll try to buy something with it and suddenly notice that the card’s balance is way down or completely worthless if you’ve waited too long.
Plus, many of these gift cards have an “activation fee”. One of them charged us $5.95 to use the card the first time. Why does the recipient have to pay this? In some states, they’ve passed laws that let the buyer of the gift card pay that fee. Hard cash doesn’t have this type of activation tax. What a joke!
Also, the gift card companies (major names in our case like Visa and American Express) don’t want to share your balance information on the cards very easily. To find out the balances, you have to go online and input the unending series of numbers to discover how much money is left. They can’t tell you your balance at the stores where you use the cards. So it’s a guessing game and the banks thrive on things like this.
The reason for this is very simple, actually. Most people won’t spend time researching the balances, so in the end the banks know all too well that people will leave a small amount of money on each card. When it gets down to $3.00, for instance, what can you buy with that? Maybe a candy bar or a DVD rental? (not anymore). Banks love the fact that people leave money on their cards. And if they don’t use it promptly, the bank will suck up that balance quicker than you can yell, “Scam!”
And the cards won’t let you buy things that cost more than the balance on the card. Another con job. The merchant will tell you the card doesn’t have enough money in it, so you can’t use it. It won’t use up the balance so that you can supplement it with another card, a credit card or cash. Most people won’t know their balances, so they won’t even know what they can buy with this ridiculous piece of plastic.
So, stay away from gift cards. Buy real gifts, or give silver or actual cash. Your friends will appreciate the gift anyway and all of the money you gift them will go in their pockets, as opposed to the deep ones the banks will swipe away at every opportunity. Whatever happened when banks actually helped people? Now they operate primarily as money vultures, waiting for you to screw up so they can bend you over right at the teller’s window.